Why Facebook Is Such an Important Friend for Goldman Sachs

[The Straight Story]

Why Facebook Is Such an Important Friend for Goldman Sachs

Goldman Sachs sent Facebook a friend request, and Facebook accepted.

The news that the investment bank has taken a stake in the white-hot social-networking giant has tongues wagging from Wall Street to Silicon Valley. As first reported by DealBook, Goldman has invested $450 million in a deal that values Facebook at $50 billion. As part of the deal, Goldman is looking to raise as much as $1.5 billion from its wealthy clients to invest in Facebook alongside the firm.

The move is straight out of Goldman’s playbook. The firm has a long history of “friending” America’s hottest companies and chief executives. By collecting so many important friends, Goldman generates big fees.

The ancillary benefits of buying a stake in Facebook are several fold. First, it has likely established itself as the leading candidate to win the very lucrative and prestigious assignment of Facebook’s initial public offering, whenever that day comes. Then, of course, there’s secondary share offerings, mergers-and-acquisitions business and other the other banking fees that would inure to Goldman.

http://dealbook.nytimes.com/2011/01/03/why-facebook-is-such-an-important-friend-for-goldman-sachs/

[madrchsod]

1. facebook is worth 50 billion? i doubt that

how`s the myspace working out for rupert?

[Atman]

3. It is until the next "Facebook" comes along.

It's all fake money. I actually started a dot com in 2000 that survived the crash and is still in business...the year we launched, the company -- which was me and two partners working out of a $300/mo warehouse space -- was valued at over $4,000,000 by Wall Street. Yet we had NOTHING. Not even an actual product yet, the site wasn't even launched. But we were "worth" $4,000,000. It's all bullshit. Part of the never-ending Wall Street shell game.

[bemildred]

2. Facebook is a fad. nt

[chimpymustgo]

4. Facebook is a part of peoples' lives now. It's here for a while.

[Yavin4]

6. "Facebook is a part of peoples' lives now. It's here for a while." Like Compuserve?

Or like AOL? Like Netscape? Like Yahoo? Like Lycos? Like Alta Vista? Like Newsgroups?

[Yavin4]

5. If Facebook Is Indeed Worth That Much, It's Because They're Selling Your Personal Info

to marketing firms. Do not believe for one second when they're saying that they are not.

Social networking sites are not new, and they've been around for years. Facebook is doing well because they sell your personal information to marketers.