From Goldman Sachs & Co.'s high-profile dealmaker, Milton R. Berlinski, to the elusive one-man shop of Roberto DeGuardiola, investment bankers are trying to hook up mutual fund firms with insurers, banks with securities firms, and whatever other concoction works.
In the process, they're changing the face of the financial services industry.
They may not all grab headlines, but matchmakers like those at J.P. Morgan & Co. - who declined interviews - were the ones who shopped Barnett Banks Inc. to NationsBank Corp., the largest banking deal ever - for $15.5 billion or four times book value.
And investment bankers were behind Travelers Group Chairman Sanford I. Weill's weaving together of a patchwork quilt of insurance, brokerage and investment banking conglomerates.
No list of matchmakers would be complete without mentioning the folks at Morgan Stanley & Co., Lazard Freres & Co. or Berkshire Capital Corp.
"I can remember when American Express took over Shearson; when Sears took over Dean Witter; when Xerox took over Furman Selz," said Perrin Long, the veteran New York securities analyst and consultant, recalling the heady 1980s. "Investment bankers keep creating businesses; that's what they're paid to do," he said.
That's an understatement. Managing directors at the big-name firms pull in $1.6 million to $2.5 million annually, according to H.I. Hunt & Co., an executive recruiting firm in Boston.
Here's a look at four of the financial service industry's biggest wheelers and dealers.
Milton Berlinski
Mr. Berlinski, managing director at Goldman, is the James Brown of investment banking.
Returning a reporter's call at midnight, he said: "Whether you're in your office, your house or in a different city, the truth of the matter is your day doesn't stop."
Not when such bigwig clients as Franklin Resources Inc.'s Chairman Charles Johnson are traveling in London, but expect a report on the progress of a merger at 2 a.m. or 3 a.m. New York time. Not that Mr. Berlinski's complaining.
Mr. Berlinski, a former consultant with Booz Allen & Hamilton Inc., was an investment banker with a boutique firm eventually bought by Merrill Lynch & Co.
Goldman recruited him in 1986 in part for his involvement in Wachovia Corp.'s landmark purchase of First Atlanta Corp., the first company to take advantage of new regulations allowing interstate banking. He set up Goldman's asset management group in 1992.
The son of an ambitious businessman who owned a conglomerate of manufacturing and jewelry businesses in the Caribbean, he says "being driven and having focus were things that came more naturally to me than for some."
He gladly basks in the limelight, brokering such high-powered and often pricey deals as Franklin's 1992 purchase of the legendary international fund manager Templeton Galbraith & Hansberger Ltd. and years later, of Michael Price's Heine Securities Inc.
But Mr. Berlinski's exalted position at Goldman exacts a high price for the lesser clients, say his competitors.
"Milton has a following," says Jeffrey Lovell, a managing partner at Putnam Lovell & Thornton of San Francisco, but "the question people have to ask is, do they believe they are really getting him."
Mr. Berlinski does have as many as 200 underlings in the financial institutions group he can call on, including 40 in asset management alone.
Still, the 41-year-old Mr. Berlinski hoards the trophies, in the form of the traditional tombstones, as a badge of his success. "You can take some," he offers during an interview at Goldman's New York headquarters. "I've got a whole box."
Dirk A. Stuurop
In contrast to Mr. Berlinski, Dirk A. Stuurop, managing director of Merrill Lynch's global financial institutions group, refuses to take personal credit for any deal. "It's a team approach here," he insists.
Not that he isn't competitive. He takes Mr. Berlinski to task over which firm, Goldman or Merrill, played the lead role for NationsBank in that Barnett deal. Mr. Berlinski says Goldman was the lead adviser but, Mr. Stuurop maintains, "In my book, the work was equally done between the two of us."
That both firms were involved is becoming more common: As deals get more complicated, companies are seeking firms to play co-advisory roles, where they may focus on just one aspect of a deal.
Mr. Stuurop may boast about his "team" of minions, but every client wants day-to-day contact with the managing director. Snipes one competitor: "You have to live with your clients. He may be running FIG (financial institutions group), but he's not in the thick of things."
Nevertheless, Mr. Stuurop's team of 40 investment bankers around the world has catapulted the nation's largest brokerage from a bit player in dealmaking 10 years ago, to a powerhouse.
"Quite frankly, it's a horse race between ourselves, Goldman, Sachs and Morgan Stanley," he said.
The merger frenzy has thrown him for a loop: "You don't know where the next deal is coming from," Mr. Stuurop said. In August, he and Merrill colleagues were brainstorming a flurry of merger ideas over dinner in a tony restaurant in Greenwich, Conn. One combination that never came to mind was NationsBank and Barnett. But not to worry. NationsBank rang him the next morning.
Under the 49-year-old Mr. Stuurop, who took the helm four years ago, Merrill has landed some high-profile cross-border deals. It advised Invesco P.L.C. in its merger with Houston-based Aim Management Group Inc., the largest ever between American and European fund firms. The complex structure entailed protecting partners at Aim, dealing with two stock exchanges and two different tax authorities.
A native of the Netherlands who began in Merrill Lynch's international investment banking unit in 1975, Mr. Stuurop worked his way up the ranks through Merrill - with only a one-year stint at a boutique competitor in 1980.
Merrill's biggest deal in the past year was for longtime client First USA, a credit card servicing company sold to Banc One Corp., Columbus, Ohio, for a whopping $7.3 billion.
Despite recent activity, Mr. Stuurop plays down the eagerness of European companies to reach into the United States, particularly among the banks. "I think people find it difficult to compete in a non-native retail market," he said.
Cultural differences make some executives shy and they also are wary of having operations too far from home, he says.
What's more, current prices are making executives queasy about the United States. As Mr. Stuurop says: "A number are also very taken aback by the valuations."
Jeffrey Lovell
Let's hope Jeffrey Lovell, a managing director at Putnam Lovell & Thornton, doesn't advise clients with the same reckless abandon he applies to skiing the bowls of Vail. "He doesn't turn," quips Paul Hondros, president of Pilgrim Baxter & Associates, Wayne, Pa., and longtime friend.
Specializing in asset management firms, Mr. Lovell's fingerprints are on more mutual fund deals than most household-name investment banks. The firm ranked fifth in mutual fund deals for the past 12 months, according to SNL Securities in Charlottesville, Va.
Among the credits: representing Kansas City, Mo.-based American Century Funds in a deal in which J.P. Morgan & Co. will acquire a 45% stake; advising Minneapolis-based Voyageur Funds Inc. in its sale to Lincoln National Corp. in Fort Wayne, Ind.; and Jurika & Voyles Fund Group in its sale to Boston-based New England Investment Cos.
Indeed, in a recent interview, Mr. Lovell boasted the firm had beat out Goldman to advise American Century on its deal with J.P. Morgan. Goldman had represented American Century in 1996 when it acquired the Benham Group.
His firm also represented Pilgrim Baxter & Associates in its sale to Boston-based United Asset Management.
Born in the 1980s, Los Angeles-based Putnam Lovell represents a modern breed of matchmaker, advising mostly aging entrepreneurs looking to retire and hoping to protect the autonomy of younger partners and staff.
These days it's easy to find buyers. "If it's a good property, it's like listing a house," he said.
Mr. Lovell, 45, landed the plum role in the American Century-J.P. Morgan deal by building a relationship with Benham Group going back six years. Mr. Lovell called the Denver-based bond manager's then-chief financial officer out of the blue to talk about potential plans for its aging executives.
"In our early days, it was a little more like a broker cold-calling someone he found in the yellow pages," says Mr. Lovell.
Now firms such as Jurika & Voyles in Oakland, Calif., are cold-calling Putnam Lovell. A big fan of the firm is Karl Mills, an executive vice president at the $7 billion asset firm.
Mr. Mills notes New England took control of only 45% of Jurika's stock, and acquired less than 50% of Jurika's revenue stream, less than what other buyers have secured.
Mr. Lovell and partner Don Putnam hail from Wayne, Pa.-based SEI Corp., where they built the firm's mutual fund and M&A businesses in the 1970s. Their partner, Mary Pat Thornton, was an investment banker at Bankers Trust Corp., New York.
Something about Mr. Lovell rubbed Pilgrim Baxter's Mr. Hondros, then head of SEI's sales and marketing, the right way. "I liked him immediately, and hired him on the spot."
What comes around goes around. Mr. Lovell's counseling skills came in handy when Mr. Hondros called on his buddy for reassurance about his high-profile decision to leave his post as Fidelity Investments' head of retail funds.
"He said it was absolutely the right thing to do," Mr. Hondros recalls. "He had worked with Harold (Baxter) before and knows Pilgrim Baxter well, and respects them a lot."
Roberto DeGuardiola
Another matchmaker is Roberto DeGuardiola, a Cuban-born former bond salesman. The 52-year-old solo practitioner, who declined an interview, was the force behind Aim's merger with Invesco.
His firm, Liquid Distribution Systems, is based in his New York City apartment. Still, he also quietly brought to the table John Hancock Mutual Life Insurance Co. and the mutual fund unit of insurer Transamerica Corp.
His reticence is countered by Aim's co-founder Charles T. Bauer, who gets uncharacteristically chatty about Mr. DeGuardiola. "He's the most persistent devil you ever saw," Mr. Bauer says. "He'll start working on deals way before they happen. He gets to know the owners, and several years later they (the deals) come to fruition."
One competitor is quick to note Mr. DeGuardiola "has limited resources for analytical or comparative work."
Therein lies his appeal. Because he's not employed by a big white-shoe firm, he's not under pressure to meet a sales revenue goal each quarter. He can't afford to spread himself too thin and risk losing a client.
"By being independent, he has the ability to spend more downtime with clients, and potential targets," says mutual fund consultant Geoffrey Bobroff in East Greenwich, R.I. "He may in some regards be viewed as less threatening than a Berlinski representing Goldman."
Crain News Service
