Life After Goldman
Featuring Financial Technology Partners' Steve McLaughlin
by Denise Lugo
Those who've left to start their own firms, like Steve McLaughlin, give high marks to Goldman as a training ground. "Goldman was a terrific place to learn the hard-core skills of the trade," says McLaughlin, who spent seven years at Goldman during the boom and the bear market-between 1995 and 2002-in its financial institutions banking group. As he explains it, that group was "widely known for its grueling hours and deals per person." McLaughlin, who had joined Goldman as an associate after receiving an MBA from Wharton Business School, says he learned at Goldman "how to master running large, complex transactions at a relatively young age." (He had spent his first three years after graduating from Villanova University working at General Electric Corp.)
By the time McLaughlin left Goldman at the age of 33, he had been named co-head of its global financial technology business and was a vp at the firm. He then started his own firm, becoming the sole owner and partner in Financial Technology Partners, a San Francisco-based boutique that he funded with the proceeds he made from the Goldman IPO and his savings from seven years at the firm. While McLaughlin won't say how much money his new firm has made, he says so far it has been so profitable that he doesn't need to raise outside capital and won't need to do so unless he wants to take on much larger underwriting deals.
McLaughlin started out in Goldman's FIG M&A group, and in 1997 he joined the group's financial services technology sector. It's the specific expertise he learned there that he brought to his new firm, which has some impressive deals to its credit. For example, it was the lead adviser for TradeScape Corp. in its $280 million sale to E*Trade Financial Corp. in 2002, and it nabbed the same role for investment bank SoundView Technology Group Inc. when it was sold to Charles Schwab Corp. for $345 million in 2003. Prior to hiring FT Partners' McLaughlin, SoundView had worked exclusively with Goldman as its lead banker in two large transactions.
McLaughlin says he left Goldman because of the change in the culture and the declining financial opportunity there. He figured that he could take what he had learned at Goldman, make more money and be happier owning his own firm. And since Goldman's practice is to give young employees a lot of authority, McLaughlin says he was able to co-run Goldman's financial technology group at a young age without any partner-level supervision, which proved valuable as he moved on.
"We were able to carve out an entire business niche within Goldman Sachs in a very entrepreneurial way during the late '90s, and now Financial Technology Partners extends that model outside of Goldman just as easily as we did inside Goldman Sachs. It was the people and our passion that primarily created the opportunity at Goldman, not only the franchise itself, and we're proving that." His firm has seven employees, two of which worked with him at Goldman. Others he hired from such firms as Credit Suisse First Boston and J.P. Morgan Chase.
McLaughlin says he is also working on numerous bulge-bracket-level deals, ranging from a half-billion-dollar-plus sale of a private company and the sale of a large public company to complex advisory and restructuring work on a company worth more than $1 billion.
"Each and every transaction we won in competition with numerous global investment banks, and most in cases where the incumbents were Goldman Sachs, Morgan Stanley, Merrill Lynch & Co. and others. And there's more on the way."
But it was his group's work on Goldman's IPO that really gave McLaughlin the vision for starting his own firm. "When Goldman was analyzing and executing its own IPO in 1999, we had a team of the best and brightest in our own financial institutions group, working around the clock, well over 100 hours per week, focusing on literally nothing else, month after month until the deal closed," he recalls. "I decided to create a firm that provided a level of unrelenting service a top investment bank would give itself, and we have done just that."
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