M&A Titans by Brett Cole

Author:Brett Cole [Cole, Brett]
Language: eng
Format: epub
ISBN: 9780470440537
Published: 2010-05-10T16:00:00+00:00

Salomon Brothers was a firm like Lazard wherein investment banking business was largely based on individual effort. Long-term planning at the firm was never in vogue.

“At Goldman they had Steve Friedman and Bob Rubin thinking about the long term. We had John Gutfreund and Ira Harris thinking about what’s for lunch,” said one former Salomon Brothers executive.25

It was not until 1978 that Salomon Brothers formed a merger department. Its founder was Harris’s former Chicago deputy, Jay Higgins.

“At Salomon everything existed to support Ira,” said one who worked there.26 As head of investment banking at Salomon Brothers from 1977 to 1981, James Wolfensohn was careful to pay due deference to what he saw as Harris’s “idiosyncratic practice that was individually oriented and hugely profitable.”27

Harris’s efforts to broker mergers were also helped by his relationship with Marty Lipton. The two men were very close, talking on the phone dozens of times a day about business or family. They had complementary abilities. Harris had a great sense for deals and who would fit would whom. He was a great door opener in getting a deal started. Harris would initiate transactions, get negotiations started, and then Lipton would join in the negotiations. The execution of the transaction became the Wachtell partner’s prime responsibility.28

“Any second-year MBA student can take two companies and tell you within 10 percent where they should trade, where the deal should be done,” said Sandy Roberston, who founded the investment bank Robertson Stephens. “What makes or breaks a deal are the psychological aspects of it. Who’s going to run what afterwards. Maybe someone internally is trying to scuttle the deal because they are going to lose their job and is whispering in the ear of the seller, ‘This is terrible.’ It’s all psychological. You, as a banker, really have to stay cool. You don’t want to burn a bridge.”29

Harris, like Rohatyn, had an extensive list of acquisitive chief executives. One was David Mahoney, who ran conglomerate Norton Simon. Mahoney was looking to buy an international consumer products company. Harris proposed that he buy Avis. “I said to David, ‘This is a consumer products company, a brand; it’s international. Most people probably rent a car more times a year than they buy bottles of ketchup,”’ Harris recalled.30

Harris benefited from a paucity of competition from Wall Street rivals. Talented Chicago investment bankers were moved by their firms to New York. There, they found it hard to compete with Harris, who had remained by Lake Michigan, for business in the Midwest. “They (chief executives) could pick up the phone and say, ‘Hey, come over for a cup of coffee,’” said Harris. “A guy in New York would have to go and get on the plane. You might get five calls for coffee before they would even want to call the guy in New York.”31

Don Kelly, president of Esmark, once called Harris over to his Chicago office for a cup of coffee. Both men hadn’t decided on what Salomon Brothers would be paid following an Esmark acquisition.

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