The deal is expected to be completed in the third quarter, Goldman said Thursday in a statement. United Capital has about $25 billion in AUM, 220 financial advisers, and 22,000 clients, according to the statement.
Goldman Sachs’s new management team, led by Chief Executive Officer David Solomon, has made building out fee-based businesses a high priority and pointed to the mass-affluent market as a source of growth.
The United Capital purchase will help the investment bank expand its Ayco business, which offers financial planning to executives at corporate clients.
With Ayco, Goldman Sachs “currently serves 60 of the Fortune 100 companies, but only 200 of the top 1,000,” analysts at Bank of America wrote in a research note last week, highlighting the growth opportunity available to Goldman in that space.
The investment bank’s push to include more stable, recurring, fee-based revenue is a shift from years past when it's trading division often posted windfalls that drove up quarterly profits.
The volatile results made it harder for analysts to consistently project the firm’s earnings, turning off some investors.
By creating more repeatable revenue, Solomon and his team are hoping it becomes easier for shareholders to anticipate Goldman’s growth trajectory, boosting the company’s value.