isit them as soon as they sign the contract with them. John Thorntons ‘American model’ brought about turmoil in the sphere of British security bank. In 1986, there were altogether five hostile takeovers in Britain, each of which was a deal with a purchasing price beyond ￡ 1 billion. And Goldman Sachs took part in four of these five hostile takeovers, three of which successfully defeated the hostile takeover. As to the rest one, the actual purchasing price was much higher than the original one. So to some extent, it could also be counted as a successful one.
As early as 1983, Thornton had already started his attempt to establish investment bank and develop franchising business in Europe. In 1985, he moved to settle down in London. Therefore, it could be said that it was almost on the basis of nothing that Thornton established his gigantic merging and acquisition business in Europe and successful opened up a new battlefield for Goldman Sachs. It is by no means an easy project, because the business culture in Europe in the 1980s was still reputed for its conservativeness and selfplacence. Even for American, they still had to ovee many handicaps in culture and custom differences.
In 2002 when Thornton, the incumbent Chief Executive Officer of Goldman Sachs and the United Chief Operative Officer left London that he had lived for 15 years and moved back to New York, the Financial Times in Britain even extolled him as a man who ‘turn London into a modern city’. The a little bit overstated words in fact meant that Thornton undermined the inactive and unprogressive operational mode of the localmercial bank.
Thorntons success also partly benefited from the privatization process in Great Britain and Germany that began in the 1980s, which provide great opportunities for such investment bank as Goldman Sachs Corporation. The project that Goldman Sachs boasts about in Britain and Germany is BPs and German Tels listing in stock market respectively. These two super project founded Goldman Sachs reputation and leading position in Europe. Besides, the incumbent CEO of BP is an intimate friend of Thornton.
Diverting Attention to Asia and Set up Subsidiary in China
Subsequently, Thornton diverted his attention to Asia although he still paid close attention to Europe and played an important role in the decisionmaking of Goldman Sachs European subsidiaries. At the end of 1996, he was appointed as the Chairman of the AsiaPacific region and stayed on that position for nearly three years. The relationship between Thornton and Asian market can be traced back to 1993 when he was appointed by Li Zekai as consultative advisor in charge of the selling of Star TV. This enabled him to know Asian market and finally promote him to be one of the major policymakers on Goldman Sachs Corporations Asian strategy.
The performance of Goldman Sachs in Asia is recognized by its Asian counterpart as solid and stable. In China, Goldman Sachs has been invited by many largescale stateowned enterprises, such as China Tel (HK 941, now renamed China Mobile), Petrochina, Bank of China (Hong Kong), to restructure thepany and assist them to list in overseas stock market. Among them, the project of China Tel one was guided by Thornton himself in 1997.
As the international business of Goldman Sachs developed, Thornton also came closer and closer to the peak position in thepany. On March 1999, Thornton became the President of Goldman Sachs. On May of the same year, he was appointed as the United Chief Operative Officer. Just like that, Thornton, along with John Thain, another United Chief Operative Officer of Goldman Sachs became the second most important figure in thepany who seconded to none but Henry Boson the CEO of Goldman Sachs.
‘Thornton is a figure with the sharpest international consciousness in investment bank area’,mented Fang Fenglei, the Executive President of EastAsia Industrial Commercial, who had worked with Thornton for many times. While in the eyes of his colleagues, Thornton is a charismatic leader. ‘Thornton is very smart person. He has such an amazing ability that he could reach the core of the problem in a very short time and bring forward the resolution scheme in a very concise way’, Zhang Lihong, the Vice Board Chairman of German Bank in AsiaPacific Region, and former Chief Representative of Goldman Sachs in Beijing Agency. She added,‘I think the position that suit him best is the position of American President.’
Saving Vodafone
Many people maintained that one of the reasons why John Thornton could achieve such a big success in Britain was that he spared no efforts to establish personal relations with wellknown leaders. One of the best examples of this happened in 1988 when John Thornton noticed some special points in a British electronicpany called Racal Group.
On the surface, there were nothing special in the Annual Financial Form on the Balance of Revenue and Expenditure. What attracted him was the mobile phone subsidiary in the Balance Form. This was a smallscalepany whose asset only consists of twenty percent of the total assets of the Group. John Thornton recalled,‘At that time, some localpanies in America were doing mobile phone business as well. And thosepanies were all suffering losses. However, the market value of several listedpanies was overestimated because people at that time still believed that the mobile phone business was doomed to have a bright future. To my surprise, I found that the mobile phone subsidiary affiliated to Racal was making profits. So I concluded that the stock value was in fact underestimated by market, and that it was very possible it would encounter hostile takeover’.
He immediately called the Board Chairman of Racal Group (actually he did not know him at that time). It was his secretary that picked up the phone and helped him record his message. In that afternoon, the Board Chairman called back him. John Thornton told him: Wed better talk this matter face to face, but by the phone because of its importance and sensibility. So they arranged to meet in a hotel where John Thornton told the Board Chairman his analysis and offered him a solution. That is to take out of twenty percent of the Groups stock to let them fluctuate separately as a way to show the market value of the mobile phone subsidiary. Then, John Thornton provided the formal report to Racal at their request. The next day, Racal Group implemented the strategy under the advice of John Thornton.
Today, there does not exist such apany as Racal Group. But that mobile phone subsidiary evolves into Vodafone, a business tycoon in Britain. And Goldman Sachs also develops into a leading magnate in investment bank sphere.
After doing so many years business activities in Europe, John Thornton found some similarities between Asia and Europe. He realized that Asia, especially China had great potential for further development. In 1994, he asked the Board Chairman of Goldman Sachs whether he could move to Shanghai or not. But he rebuffed Thorntons request because in his opinion Thornton could have a better career than in Asia. But Thornton did not lower his interest and attention to Asia. During this time, he acted as a consultant to assist Li Zekai in selling Star TV to Murdoch, the global media tycoon.
In fact, Murdoch did not have much interest in purchasing Star TV. And the experts involved also considered that there was little chance for success because Star TV at that time was still suffering losses. When John Thornton met Murdoch in Los Angeles and London, he seldom touched upon the details on the operation of Star TV. On the contrary, he talked a lot on the economic development and the market potential of China. At last, Murdoch agreed to purchase Star TV at the price of $ 1 billion. John Thornton and Murdoch bes very good friend since then. Later Murdochs BskyBs listing in Britain waspleted by John Thornton as well.
Mr. Thornton arrived at China for the first time in 1993 and worked there for one years time. During this period, he developed great interest in China. And five years before when he was still the Chairman of Goldman Sachs in AsiaPacific region, now 49 yearsold John Thornton had already established closemunications with many sectors and enterprises in China.
In 2003 when he was the frontrunner in taking over Henry Boson to be the CEO of Goldman Sachs, he suddenly declared he would resign and accept the appointment of Tsinghua University as a guest professor there, which meant that he had to journey to and fro from Beijing and his home in New York.