Goldman Sachs

Goldman Sachs made an effort on managing conflict of interest in the merge of El Paso Corporation but failed eventually. After thought over the process of this case, I would say that Goldman Sachs responded inadequate at very beginning step.

Even though Goldman Sachs was not intentional to ignore the personal investment of the lead banker, Steve Daniel, it could be claimed as irresponsible to appoint a manager who had conflict of interest to take over the case. What’s more, when comes to the payment method, Goldman Sachs should not be reward for both two transaction results. It is inadequate to receive almost same fees in both situations. In other words, there was no motivation for Goldman Sachs to work hard for El Paso to get the highest premium. One recommended practice should be admitted. It is an appropriate decision to engage Morgan Stanly as the second financial advisor to make a more independent judgment, when Goldman Sachs found itself in a conflict of interest because it held a 19 percent stake in Kinder Morgan worth $4 billion and controlled two seats on the company’s board of directors. However, the contract with El Paso pushed Morgan Stanly to a situation which was not free of conflicts also.