Outlook: Goldman Sachs

JON CORZINE, co-chairman of Goldman Sachs, has plainly lost the battle, but has he also lost the war? Mr Corzine has spent several years attempting to persuade his fellow partners that the future for the world's best known investment bank lay as a publicly-quoted company rather than an old-style partnership. Eventually a convincing majority agreed with him, but they did so too late to make it happen. By the time they'd made up their minds to sell, nobody wanted to buy.

As always in such circumstances, it proved difficult for senior partners to admit this. As it happens, Goldman Sachs is less up its own whatsit than many of its peers in investment banking; its people are as savvy and switched on a breed as it is possible to find. But even so, they are not used to failure and the realisation that they had their timing so badly wrong has been a humiliating one.

None of this means that Goldman Sachs is flawed in its strategy of flotation, or that the plan is now buried for good. Indeed, if Goldman Sachs is going to prosper, grow and consolidate its position in the next upturn, it has to float. As for the present business cycle, Goldman Sachs has obviously missed its chance, but bad though things now look, this is not the end of capitalism, or global capital markets.

The immediate outlook is rocky, but ultimately the experience will prove a cathartic one. Capital markets will emerge strengthened and rejuvenated, and when they do, the opportunities for investment banks - in terms of reorganising global industries, savings, international trade and restructuring emerging economies - will be as rich and varied as ever. The most forward- looking businesses are already looking beyond the present malaise to a time when they can meet that challenge. If Goldman Sachs is going to be up there with Merrill Lynch, Morgan Stanley and Travellers, as it presently is, it's going to have to float.

Access to capital is part of the reason, although it is obviously the case that you don't necessarily need your shares to be quoted to obtain capital on favourable terms. Transparancy is another. Part of the process of rebirth for capital markets is going to be much greater disclosure. In such a world, an old fashioned and secretive partnership is going to look out of place and out of date.

But most important of all, human nature requires value recognition and the only mechanism we have for assessing it is the market. Most active and sleeping partners at Goldman Sachs want a value put on their stakes, and non partners want a share of the spoils to bind them in. Again, flotation is the only way to achieve this.

The IPO is on the back burner for the time being, but it is a racing certainty that in three to four years' time, Goldman Sachs will indeed be a publicly quoted company.