. Brinson: Chief executive officer, UBS Brinson and Brinson Partners Inc., Chicago
In the late 1980s, (First National Bank of Chicago) was reassessing its business strategy. They wanted to restructure across the entire bank, which was going through a difficult time . . .
Our feeling was the restructuring idea probably wouldn't work very well in the asset management business. Essentially it wouldn't provide for staff or retain people.
They wanted to cut staff, cut expenses, change the compensation structure.
We pointed out to them that there might be a better way to accomplish their objective. That's when we got into a discussion that maybe the best way for them to accomplish their capital needs was to sell the investment management business.
When we pointed that out to them, they agreed.
They felt a natural reluctance to exit completely from asset management business, and by retaining minority ownership (10%), it gave them a way of participating in the business as an owner.
All the professionals (at Brinson) participated in the deal (in 1989). We made the ownership widespread. . . . We had to borrow a significant amount of money.
We had Hellman & Friedman come in. They were most knowledgeable about the industry and asset management business and understanding the key driving this (deal) was people and not hard assets. They put together the financing package. . . .
I wanted to make sure we were in complete control of our own destiny in providing investment management services to our clients. . .
Almost without exception clients and consultants were positive. About the only consultant firm that wasn't was Frank Russell, and they never view anything we do favorably because they are a competitor of ours.
The only thing that changed was the ownership structure. (It was the) same people, same philosophy, same investment approach. We even stayed physically in the same quarters; we leased the space from First Chicago until we moved into the nearby Rookery Building.
It turns out to have been a wonderful time to have done the deal. Shortly after doing it, the financing market dried up. So if it had been 1990, we might not have been able to do it.
We were one of the first to do something like that. Certainly at the time the size of our deal was one of the largest that had been done. The total value was $100 million.
We were fortunate that in the ensuing years the recognition of the marketplace gravitated in the same direction we were running our business.
I don't think we ever envisioned that Brinson Partners would become so large. We just focused on excellence in performance and client service. We felt if we focused on those two variables, the growth and profit of the business would take care of itself.
We've never had any explicit growth targets. I'm not a big believer in growth plans. It misfocuses people. You are better off thinking about executing, and executing well on the playing field you are on, than thinking about growth.
For me it was a sad time also. My father passed away in the middle of the negotiations.
That summer, when we were working this out, I remember my father saying to me that he was worried -- my father grew up in the Depression -- I was going to leave the bank. How was I going to get the money to feed my family? He had taken comfort in the fact I was part of the bank. Somehow in his mind that meant that I would always be able to feed my family, that I had a secure job.
It was natural for a man who grew up in the Depression. He didn't know anything about banking or finance; he was a bus driver.
(In 1994, Swiss Bank Corp., seeking expertise in global investment management, bought Brinson Partners. In 1997, Union Bank of Switzerland announced its merger with Swiss Bank, making Brinson Partners part of an even larger banking organization.)