Goldman roaring back after lean year as adviser.

J. Christopher Flowers' precision-drill banking team at Goldman, Sachs & Co. will long remember the summer of 1991 - in nightmares. Three of the biggest banking mergers in history were announced, and Goldman, the nation's preeminent investment bank, was involved in just one of them.

Mr. Flowers, 34, has little to say about the firm's absence from Bank-America Corp.'s marriage with Security Pacific Corp. and NCNB Corp.'s successful courtship of C&S/Sovran Corp. He can, after all, brag about Goldman's role as adviser to Chemical Banking Corp. on its $2.3 billion merger with Manufacturers Hanover Corp.

But after Goldman's relatively disappointing 1991 - it slipped to fifth place among bank merger advisers, from fourth the year before - the company realigned its investment banking organization. And this year, its financial institutions group is back with a vengeance.

Goldman advised on bank merger deals valued at more than $3 billion in the first half of 1992, outpacing all its rivals, according to Securities Data Co.

It has accelerated the pace in the past two months. Announcements of Dominion Bankshares Corp.'s acquisition by First Union Corp., Bank of Boston Corp.'s embrace of Society for Savings, Norwest Corp.'s deal for Lincoln Financial, and Society. Corp.'s plan to buy First Federal Savings and Loan of Fort Myers, Fla., all carry the Goldman mark.

And in the bonanza deal of the quarter, Goldman helped Mellon Bank Corp. win a heated bidding war for the Boston Co. The Pittsburgh bank company is paying American Express Co. $1.45 billion for the money management specialist..

Such lucrative successes are a byproduct not only of Goldman's well-documented braininess and tough-minded negotiating stances, but also of a corporate culture that places teamwork before individual glory.

In late 1991, the firm reorganized its financial institutions group as part of a bigger reshuffling of its investment banking department.

Teamwork Approach

Mr. Flowers' 12 advisory professionals were more closely teamed with the 45-person corporate finance group led by Joseph H. Wender.

The two units were moved to a single floor at Goldman's lower Manhattan headquarters, and a team client coverage philosophy was instituted.

Two lead bankers - one from corporate finance and one from mergers and acquisitions - are assigned to each deal the firm is working on. Goldman tries to ensure that at least one of the bankers is a partner in the last of Wall Street's major private partnerships.

"We're trying to blur the distinctions between mergers and corporate finance," said Mr. Wender.

To be sure, Goldman's merger team was not somnolent in 1991. In addition to its Chemical assignment, the firm worked on 11 other deals, assisting in mergers worth $4.8 billion.

Goldman also had good reason for being shut out of 1991's other big deals. A well-placed source said Goldman has an exclusive agreement with First Union that bars it from representing other southeastern superregional companies.

That effectively took it out of the running on the merger of NCNB and C&S/Sovran, which created NationsBank.

Moreover, it had been working with Wells Fargo & Co. on its negotiations with Security Pacific in 1990 and 1991. When BankAmerica came in to sweep up SecPac, Goldman's attentions were elsewhere.

Goldman officials declined to comment.

Durable Reputation

Observers said Goldman's role in the Chemical merger illustrates the value of its pedigree.

Merger work starts with contacts, and the 223-year-old partnership has plenty of them. Its former co-chairman, John Whitehead, went on to become deputy secretary of state in the Reagan administration.

Its current co-chairman, Robert Rubin, is a leading contender to be Treasury secretary if Bill Clinton is elected President. And its senior chairman, John Weinberg, is said to know every important commercial banker.

Indeed, Mr. Weinberg's midtown Manhattan office served as an incubation tank for the Chemical-Hanover merger.

"In the early months, it was just the three of us really," Mr. Weinberg said, referring to Hanover chairman John McGillicuddy and Chemical chairman Walter Shipley. "They made all their own decisions. John decided when he'd retire, and they decided the name of the company. When they got down to pricing, they had to call people in."

Key Obstacle Removed

Getting the two executives to agree on the merger was probably the most significant obstacle to a deal, according to banking consultants.

Mr. Weinberg helped Mr. Flowers and Mr. Wender again on the linchpin part of the deal - the $1.5 billion stock offering that financed the stock swap and built the capital that regulators demanded.

The Goldman banker acted as master of ceremonies during many of the road shows the banks made to institutional investors.

Mr. Flowers and other young partners are eager students of the firm's elder statesmen.

Little Turnover

"From our perspective, Chris is a quality individual - an excellent thinker and conceptualizer but also a practical businessman," said Steven G. Elliott, vice chairman and chief financial officer of Mellon Bank.

Another quality that clients praise in Goldman is its consistency. Unlike other Wall Street firms, where investment bankers come and go with the regularity of seasonal bonus calculations, Goldman employees do not often move. The promise of a partnership is a strong lure.

A private placement memo for a Goldman offering that was revealed in Investment Dealers' Digest last week showed that the firm earned an eye-opening $1.15 billion of pretax profits in 1991.

Its partners' capital at the end of the first two fiscal quarters of this year was $3.3 billion, 27% higher than in the comparable period of 1991.

No wonder Mr. Flowers enjoys the Goldman life.

He joined the firm's M&A department after graduating from Harvard in 1979 with a major in applied mathematics, and he has never left.

He was named head of the financial institutions group's mergers practice in 1986, and remains the youngest person with such a title at a major Wall Street firm.

A Full Schedule

Mr. Flowers, who lives in Manhattan with his wife and daughter, says he works "pretty much eight to eight" on weekdays. That's not to mention weekends, which are colored with a healthy splash of telephone work and not infrequent appearances at Sunday board meetings with Goldman clients.

Robert Falise, who was general counsel for Irving Bank Corp. during its unsuccessful effort to fend off the advances of Bank of New York Co., has nothing but praise for Goldman, despite the losing yearlong effort.

For example, he says, Goldman's international contacts helped Irving raise a $400 million defensive kitty through the sale of its Banco Suizzera Italiana subsidiary.

"We had 35 or 37 board meetings, and Goldman participated in all of them," he said. "We highly regard their services."

Mr. Falise, now chairman and managing trustee of the Manville Personal Injury Settlement Trust, said he has retained Goldman for advisory and other services in his current job.

Tendency to Advise Sellers

If there has been one central flaw in the Goldman advisory strategy under Mr. Flowers, it's been the emphasis on counseling sellers rather than buyers. The investment banker concedes that the strategy doesn't do much for his own unit's repeat business, but he professes to be unconcerned.

"Historically, our business has been more on the sell side," he said. "We emphasized raid defense and built our business through that effort."

He also points to Goldman's recent role in Mellon's acquisition of the Boston Co. as a sign that the firm changes with the times.

Known for Tenacity

Once Mr. Flowers' team gets involved in negotiations, it has a reputation for tenacity that clients love and opponents loathe.

"I think there's a point where investment banks can get too damn involved and blow a deal," said William Dougherty, an executive vice president at KeyCorp, referring to the firm's recent negotiations to buy Puget Sound Bancorp. "Goldman spoke for Puget a lot. We like to have investment banks at our side" but not running the show, he said.

An investment banker at another firm accused Goldman of inflexibility in negotiating. But even this longtime competitor has to give the firm its due.

"On balance they're really good," he said ruefully. "I wish I could I could tell you otherwise."

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