BrokerDealer.com blog post courtesy of extract from July 5 story from The New York Times
A battle is raging on Wall Street as never before, with powerful factions scrambling for control of a precious resource.
On one side are the giant investment banks and broker-dealers, with names like Morgan Stanley and Goldman Sachs. Lined up against them, but also warring among themselves, are the giants of private equity — Kohlberg Kravis Roberts, Apollo Global Management and the Blackstone Group, to name just three. And the private-equity firms just happen to be the banks’ clients.
The prize they are fighting for is young talent.
This summer, dozens of junior bankers in their early to mid-20s will start jobs in private equity after spending their first two years out of college working at investment banks. Private-equity firms use billions of dollars of cash and plenty of debt to buy entire companies. They are seen by many young strivers as the next rung on an elite career ladder, promising higher status and more pay — around $300,000 a year, including salary and bonus, roughly double what a second-year banker might earn at Goldman.
But for junior bankers, who are known as analysts, securing such a job means stepping into the middle of a Wall Street struggle that has intensified since the financial crisis.
For the full story, please click here.
Extract courtesy of May 25 Sunday New York Times/Gretchen Morgenson
Private equity has become $3.5 trillion piece of the $64 trillion asset management industry.
There was joy on Park Avenue as the news arrived from Warsaw, a small Indiana city.
Two companies, twin pillars of Warsaw’s economy, had decided to merge. It was the biggest business story to hit the town in decades; an area newspaper, The Elkhart Truth, called the deal nothing short of an “earthquake.”
Back in New York, in the Midtown headquarters of the Blackstone Group, the tie-up meant a handsome payday for Blackstone and a handful of other private equity specialists. Together, they had bought one of the Warsaw companies, Biomet, in 2007. Now they had agreed to sell it for $13.4 billion, or $2 billion more than they paid.
Such is the way of private equity, a signature Wall Street business of the past two decades. The sale — Biomet was bought by Zimmer Holdings, creating a leading orthopedics company — meant a nice return for everyone, including public pension funds that had invested their money in the private equity partnerships that owned Biomet.
But for Blackstone and the other private-equity partnerships in the deal — overseen by Goldman Sachs, Kohlberg Kravis Roberts and TPG Capital — this deal will be a gift that keeps giving. That’s because, beyond the profits they share with their clients, they will be paid millions more in fees — for work that they are never going to do.
For the complete story from the NY Times, please click here