Breakingviews: Goldman Sachs alumni rebuild Goldman of yore

There will never be another Goldman Sachs – or will there? Byron Trott, the banker known for advising billionaire Warren Buffett, seems to be recreating some version of his former employer. He unveiled plans on Wednesday to unite his Chicago-based BDT boutique with an investment firm that grew out of Michael Dell’s family office, which is also led by a veteran of the Wall Street firm, Gregg Lemkau. Backing clients under a veil of privacy and scanty regulation certainly evokes the investment banking powerhouse’s days before its initial public offering some two decades ago.

Trott and Lemkau will serve as co-chief executives of the new firm, paying homage to Goldman’s habit of dividing senior roles between two people. Trott even uses the quaint “merchant bank” terminology of yore to describe his shop. And BDT and MSD Partners enlisted the services of another fellow group of alumni, at independent advisory firm Ardea Partners, to help structure the deal. Adding MSD’s $20 billion of assets under management expands BDT’s capabilities advising and investing in closely held companies such as clothier Patagonia and grill maker Weber, to include private credit, real estate and fast-growing technology and healthcare outfits.

Of course, the bigger BDT-MSD gets, the more conflicts of interest there will be to manage, a challenge that consistently plagues Goldman. Another battle is that of keeping the partnership culture, which at Goldman was established by Sidney Weinberg, John Whitehead and others. In that sense, Trott and Lemkau may be recreating Goldman in miniature, but they’ll only want to do so up to a point.

(This item has been corrected in the first and second paragraphs to reflect Dell investment firm involved.)

_______________________________________________________________________