The healthcare team within Goldman Sachs' investment-banking division in New York City suffered a series of losses to its bench of junior talent this month, Insider has learned, with three current and former employees saying at least 11 associates and first-year analysts have departed the group over frustrations with compensation and the bank's work culture.
At least half a dozen first-year analysts left this week after receiving their year-end bonuses, according to two people with direct knowledge of the exits. On top of that, an additional five associates departed the healthcare group in recent months, according to one of them who left after receiving a lackluster bonus that fueled feelings of personal frustration and disappointment.
Before the exits, the group counted roughly 60 associates and analysts on its New York City desk, according to the former associate, meaning that the loss of 11 junior bankers amounts to roughly one-sixth of the healthcare team's junior labor force in New York.
"It'll be definitely stressful to the group" to keep up with their volume of work going forward, because this represents "a large proportion" of the team, one of the two current employees in the US said.
The current banker in the US and the former associate said that the exodus of talent could curtail the healthcare team's ability to execute on current deals and pursue new business — a crucial consideration given the group's placement as the second-largest healthcare advisor among US banks by net revenue.
What's more, the departures are the latest in a series of defections at Goldman since the beginning of last year that have shone a harsh light on the bank's culture and internal work conditions.
But this latest wave of departures shouldn't be seen as unusual given the time of year, with bonus season for junior bankers happening this month, said a person close to the bank. "There's always natural turnover around bonus season, and this small number of departures is par for the course," the person said.
The six first-year analysts handed in their notices on Wednesday and left the same day, the person close to the bank said. The two current US employees with knowledge of these departures said that, after the analysts received their year-end bonuses earlier this month, they left the division to take other jobs with immediate start dates.
The five associates, meanwhile, departed in recent weeks, with a major factor in their decision being that their bonuses were severely cut from last year's record levels, said the ex-associate, who pegged this year's bonus figures as being about 60% lower for both associates and analysts.
"The consensus was just that they were being worked hard and felt unappreciated," said the current US employee quoted earlier.
All three current and former Goldman Sachs employees who spoke to Insider insisted on the condition of anonymity to freely discuss what they had heard and seen, because matters related to compensation and personnel are private and they were unauthorized to discuss them with reporters.
Goldman Sachs' healthcare-banking arm is a leader in the industry. And for any investment bank large or small, losing a significant chunk of its junior staff can be a burden, because it means that recruiters and HR personnel have to work double time to refill vacated roles, and senior bankers have to step in to pick up slack and fill the void.
Conventionally, vice presidents, associates, and analysts are responsible for keeping the levers of execution turning on live deals, while their more senior counterparts like managing directors and group heads stay occupied with tracking down new business or liaising with corporate boards.
Unexpected departures, disappointing pay
More senior healthcare bankers seemed surprised when they were notified of the analysts' departures this week, according to the current US employee, who has since spoken with a member of the group of analysts that left.
According to this employee, the group of freshman bankers privately expressed frustrations over harsh work conditions, regularly staying awake working till 5 in the morning, and irritation with the team's mounting demands.
What makes the sudden volley of departures even more noteworthy is that the exits were among analysts who were just in their first year on the job.
It's unusual for junior bankers to suddenly cut ties with their firm after spending just one year at the bank versus the conventional two years, before some are promoted to the associate level and many others filter out to roles in the worlds of asset management, private equity, and hedge funds.
Members of the group of analysts who left the firm this week did not respond to requests for comment from Insider on Friday in time for publication. The current US employee with knowledge of the group's thinking said it appeared that most have accepted jobs with immediate start dates.
The annual timeline for when analysts and first-year associates receive their bonuses appears to have played a part in informing the decision to quit when they did. Indeed, unlike their more senior counterparts, junior bankers tend to receive their bonuses in August, whereas higher-ranking bankers receive them in the beginning of the New Year, following performance reviews that generally happen toward the end of the year.
But this year, lukewarm bonuses left associates miffed and ready to leave, said the ex-associate who spoke to Insider. This person said that first-year associate bonuses this August ranged from just $25,000 on the low end — an extraordinarily low number in terms of investment-banking norms — to up to $75,000 for top performers, compared to last year's up to $200,000 bonuses for the healthcare team's highest performers.
But 2021 was the largest M&A year in history. Deal volumes have since shrunk, causing investment-banking revenues across the industry to plummet. At Goldman, IB revenue nosedived by more than 40%, the bank said in its most recent earnings report, with Chief Financial Officer Denis Coleman warning that it would take a more cautious approach to replenishing headcount lost through attrition and would reduce the "velocity" of hiring.
Taking into account first-year associates' $150,000 base salary, overall compensation this year ranged between $175,000 to $225,000, the ex-associate said. Senior bankers in the division explained to frustrated juniors that 2021's record fee pool was an anomaly and that they shouldn't compare this year's bonuses to last year's, the person said — but first-year associates weren't buying it.
"Folks just felt like the firm has gone backwards to not paying Street compensation," the person said, referring to a long-held industry theory that Goldman pays bankers less than some of its rivals.
Mounting stress for a blockbuster banking division
The vice president responsible for disseminating work to the analysts on the team protested that the analysts may have been in violation of company policies that require them to disclose to Goldman their plans to leave the bank before signing an offer letter with another employer, according to the person close to the bank.
What's more, this vice president is said to have told the analysts that she would include notations to that effect when filing the regulatory documents that the bank is required to fill out upon the exit of any employee from the firm.
The vice president also proceeded to shut off access to the employees' company email accounts after four of the analysts sent farewell emails to their colleagues, the person close to the bank said.
The vice president did not immediately respond to a request for comment.
The person close to the bank added that the former employees had not previously expressed complaints on the job, and had recently participated in an all-expenses-paid ski trip hosted by the bank's partners.
Goldman's healthcare advisory practice brought in more than $3.6 billion in net revenue on overall transactions from 2018 to 2022, according to deal-tracking firm Dealogic. That puts it second only to JPMorgan Chase (which produced almost $4.22 billion in net revenue), and well ahead of rivals including Morgan Stanley, Bank of America, and Citi.
When it comes specifically to healthcare mergers and acquisitions in the US, Goldman bests JPMorgan, producing net revenue of nearly $1.6 billion over the past four and a half years — putting it behind only the elite boutique bank Centerview Partners.
The Goldman Sachs healthcare team has been making it rain recently, advising on five announced M&A transactions over the past three months, according to the person close to the bank, one of which was working on Amazon's blockbuster takeover of primary-care provider One Medical. Goldman advised billionaire Jeff Bezos' tech behemoth in the nearly $4 billion buyout, with managing director Jim Sinclair co-leading execution on the transaction on behalf of the healthcare team, as Insider exclusively reported last month.
And while M&A volumes globally have been down over fears of a potential recession and rising interest rates, the first current Goldman employee who spoke to Insider said that the healthcare team has been doing diligence on possible transactions or scoping out deal opportunities for clients, even if they don't materialize. Pitching and prospecting for new business has also kept healthcare bankers at the firm busy, the person added.
But the former associate said that losing at least 11 bankers could affect the team's ability to get work done. Senior healthcare bankers at the firm would be likely, for a time, to take their foot "off the gas pedal" in seeking out new opportunities, the person added.
Past complaints about Goldman's culture
This isn't the first time Goldman has suffered defections at the junior ranks because of qualms over work conditions.
The bank has attempted to fend off scrutiny and criticism since the spring of 2021, when two surveys of the firm's investment-banking analysts painted a harrowing picture of juniors' claims about draconian working conditions, 100-hour work weeks, and an environment that contributed to feelings of despair during the depths of the pandemic.
Last summer, 12 of the investment bank's 16 analysts on its technology, media, and telecommunications desk in San Francisco chose to depart before the conclusion of their two-year analyst program, Insider first reported at the time. The hemorrhaging of junior talent put pressure on the team's execution capabilities, people with direct knowledge of internal conversations told Insider, forcing that desk to turn away some deal opportunities.
Inside Goldman's headquarters at 200 West Street in lower Manhattan, there are few signs that the pressure has led to fundamental cultural improvements. A March 2022 survey conducted by the online forum Wall Street Oasis, which polled nearly 500 people who self-identified as investment-banking analysts, found that junior bankers at the firm continue to report working long days and seeing their physical and mental well-being deteriorate on the job.
Thirty-nine percent of respondents in the survey said they regularly worked more than 90 hours per week (down four percent from the year prior), and, on average, that on a scale out of 10, their mental well-being before starting the job was an 8.5, but had fallen to 4.1 at the time of the questionnaire.
In response to one of the leaked surveys last year, Goldman CEO David Solomon told staffers in an internal voice memo in March 2021 that he heard their pleas for help – but that pushing harder on clients' behalf would be an antidote during difficult times.
"In the months ahead, there are times when we're going to feel more stretched than others," he said in comments at the time. "But just remember: If we all go an extra mile for our client, even when we feel that we're reaching our limit, it can really make a difference in our performance."
Do you work at Goldman Sachs or do you have additional details about the healthcare-banker departures mentioned in this article? Contact this reporter to share your thoughts. Reed Alexander can be reached via email at ralexander@insider.com, or via SMS/the encrypted app Signal at (561) 247-5758.
