A Goldman Sachs private wealth manager’s advice to wealthy IPO founders

• An IPO can lead to sudden wealth creation and leave founders wondering how to manage it.
• A top Goldman Sachs wealth advisor shared key considerations for startup founders.
• This article is part of “The Road to IPO,” a series exploring the IPO process from pre-launch to post-launch.

In 1987, Bill Gates became the youngest billionaire in the world, at 31 years old. His fortune had already increased the year before when his creation, Microsoft, went public on the Nasdaq.

Like many founders who have taken their companies public, Gates has seen incredible wealth transform his life and turn him into a new tax bracket. The bank that led Microsoft’s initial public offering was Goldman Sachs, the The Giant of Wall Street renowned for its leadership in both public broadcasting advisory and managing private merger transactions.

Goldman executives have forecast in recent months an increase in public offerings this year after a slow in the last two years for IPOs. The Accounting and tax giant EY found that IPOs are back this year and has tracked 82 U.S. IPOs through the first half of 2024 that have collectively raised $18.6 billion in revenue. That puts this year ahead of last year’s tally, at 63 deals generating just over $10 billion in revenue.

So far in 2024, Goldman Sachs’ IPO team has worked on 16 U.S. public offerings that have generated more than $1.5 billion in value, according to deal tracker Dealogic; this is an increase from last year’s eight IPOs, which resulted in a value of $930 million.

Founders who go through successful IPOs may find they have a number of new money management needs, according to Kerry Blum, global head of equity structuring in private wealth management at Goldman Sachs.

“When someone has invested a significant amount of their life into creating a company and establishing a leadership team, we appreciate that there’s a lot of emotion attached to that asset,” Blum told Business Insider in an interview. “We understand that the decisions they make are important both economically and emotionally.”

The team reporting to Blum – a 20+ year Goldman veteran who was promoted the bank’s elite partnership in 2022 — supports family offices and high-net-worth clients, such as founders of big-ticket companies. Blum’s team is separate from the equity markets group, which advises companies on IPOs, and is located within the investment banking division.

Through the bank’s One Goldman Sachs program, which brings together various lines of business to cross-sell services to clients, Blum and her team share recommendations with their colleagues in the firm’s investment banking division. That could mean investment bankers referring clients doing IPOs or mergers to their private-equity counterparts working with Blum, or vice versa, for example.

The team is equipped with a toolkit of strategies to help clients meet their money management goals – from trust and estate planning to strategizing when and how founders should sell shares.

Blum shared her advice for founders who may be on the verge of successful IPOs and how they can work with wealth advisors to prepare themselves and their families for a prosperous financial future.

Start the conversation early

If you’re considering an IPO, it’s never too early to broach the subject with an advisor, Blum said.

Many pre-IPO founders will have a relationship with a wealth advisor, she said, and it’s not unusual for them to have initial discussions several years before an IPO.

About three to six months before the IPO listing date, conversations between a founder and their advisor tend to intensify substantially, according to Blum.

“We will be more engaged with customers on a more regular basis to help them understand: What does the landscape look like? Blum said BI.

Think messaging and signaling

For many founders going through an IPO, the milestone may represent the first time they consider selling large equity stakes in a business they’ve built from the ground up. It is important to be aware of what such decisions may indicate to other investors and manage the process accordingly.

Indeed, founder stock sales often come with additional rites such as issuing securities filings, “so we want to make sure we factor in messaging and signaling considerations,” Blum said.

“You can take a company public once. You can also make your first sale as a founder once,” she added, stressing the importance of being careful and deliberate when making such moves.

Her team tracks other companies’ regulatory disclosures and information about Goldman’s own client portfolio to learn what other founders are doing.

With this information, Blum’s team can answer customer questions such as:

• How do their peers in the founding community think of themselves?
• When are they sold?
• How are they sold?
• How much do they sell?
• Where do I sell?

Find out what your priorities are

Managing money after an IPO is, in some ways, like managing your portfolio as it always has been, but with more considerations to deal with and more resources at play, Blum said.

This means diversification across asset classes becomes even more important, as do other options, such as the philanthropic initiatives a founder might want to support.

“We also spend some time helping clients make sure they’ve thought about what their impact and legacy might look like,” Blum said. “And even though it’s been 10 or 15 years, it’s never too early to think about how to optimize for those events.”