Goldman Sachs’ Middle Market Lending Group, a financing division focused on mid-market M&A lending, just got a new head, according to an internal memo shared with the firm’s employees.
David Sommer, previously a managing director within Goldman’s leveraged finance group, was promoted to lead the Middle Market Lending Group. The move underscores the investment bank’s continued push into the middle-market advisory and financing business.
Goldman’s leveraged finance group will now solely focus on financing larger clients, while the Sommer-led division will head up its offering focusing on mid-market clients. Sommer will report to Will Bousquette, global head of Goldman’s Cross Markets Group (CMG), and David Friedland, America’s head of CMG.
Sommer will advise both PE clients and their portfolio companies – which make up about 60 percent of the CMG business – as well as corporations with enterprise values up to $2 billion.
“It’s about bringing our existing M&A and lending expertise to the small- to mid-cap client base in a focused and targeted way, so we can show clients that they are getting dedicated professionals and this client base is their number one priority,” Friedland said.
Goldman Sachs’ Middle Market Lending unit was established in 2012 to advise smaller clients, and when the Cross Markets Group (CMG) was created, it was moved under this umbrella. Goldman Sachs established CMG in 2019 to provide a broad set of financial advisory services to middle-market companies with enterprise values under $2 billion.
The division’s David Friedland and Pete Lyon sat down with PE Hub last fall to delve into the firm’s growing mid-market strategy.
CMG will now work in tandem with the Middle Market Lending unit to offer a full suite of financial products to one client base.
That will allow the bank to advise in a more effective and efficient manner, Friedland said. “[That] gives clients more comfort that we are going to maintain that greater focus by having that separate group,” he said.
For Goldman, which has built its reputation by leading some of the largest global M&A processes, having a dedicated mid-market unit means having professionals who are not “running after the next large LBO,” Sommer told PE Hub.
“We are not distracted by those other deals,” Sommer said. “All day long our day job is focused on middle-market financial sponsors and corporates, so we are better able to cover them and better able to address those deals more consistently.”
According to Sommer, the financing landscape and availability of credit has changed significantly in light of the global pandemic, however, opportunities are picking up now.
“The market is recovering and doing quite well, and as the market has continued to recover as more liquidity has gone in to the leveraged finance markets – acquisition financing is beginning to take place,” Sommer said.
“As more liquidity has entered the market, the single-B-credit-rated company now has access to the loan market and that is a market that many companies and financial sponsors use for financing,” he said.
Sommer also has an optimistic outlook for middle-market M&A.
“M&A sell-side processes are beginning to launch and sponsors are participating in those conversations and looking for companies to buy,” he said.
“We are in multiple discussions with multiple clients that are looking at M&A opportunities and we’re looking to provide them with capital.”
While those conversations are still in relatively early stages, the fact that they are happening shows signs of the economic recovery. Such discussions were not happening a month ago, Sommer said.
Before joining Goldman in 2015, Sommer worked on the leveraged finance teams at BNP Paribas and J.P. Morgan.
Action Item: Check out PE Hub’s interview with the heads of Goldman’s CMG effort.