Known by his much-hated moniker “Bid ’em up Bruce”, Bruce Wasserstein wasn’t your typical investment banker – he didn’t dress, talk or act the part – yet he was arguably the most influential investment banker in the history of the mergers & acquisitions industry!
During his nearly 30 year-long career, Bruce Wasserstein presided over an astonishing 1,000 transactions valued at over $250 billion, served as the head of several different investment banks and had a net worth of more than $1.4 billion…
Early Life
Bruce Jay Wasserstein was born on December 25 1947 in Brooklyn, New York into a Jewish immigrant family.
His father, Morris Wasserstein, had left Poland for New York before the outbreak of WWII and had established a successful ribbon company, whilst his mother, Lola Schleifer, was a dancer and the daughter of Simon Schleifer, a semi-famous Polish playwright and local Hebrew school principal.
The middle child of his parent’s five children, several of Bruce’s siblings went on to become notable in their own right.
Bruce’s younger sister Wendy became a successful playwright like her grandfather was, whilst his older sister Sandra became a moderately successful businesswoman. Additionally, Bruce’s sister Georgette married famed psychiatrist Albert J. Levis.
Attending the local Yeshiva of Flatbush private Jewish day school, Bruce excelled academically and attended the University of Michigan after graduation. He graduated in 1966 at the age of only 19!
Later attending Harvard Law School and Harvard Business School, Bruce joined a group of volunteer law students led by political activist Ralph Nader (dubbed “Nader’s Raiders” by the press) in overhauling the FTC and its policies.
And whilst many of his classmates were out protesting against the Vietnam War, Bruce spent a year at Cambridge University in the UK as a Knox Fellow, studying British mergers.
Early Career
After graduating from Harvard Law, Bruce became an attorney at Cravath, Swaine & Moore, a New York-based white shoe law firm specializing in mergers & acquisitions. He soon impressed the partners at the firm by taking risks others wouldn’t.
Working closely with New York-based investment bank, First Boston Corp., one of Cravath, Swaine & Moore’s most famous clients, Bruce met Joseph Perella, an associate in the bank’s M&A division, in 1976.
Impressed with the young lawyer’s knowledge of his client’s needs and intelligence in the field of M&A, Joseph Perella was convinced that First Boston needed to hire the young lawyer with a business degree before one of their competitors snatched him up.
Convincing his superiors as much, Bruce Wasserstein joined First Boston’s M&A division in 1977. Together with Joseph Perella, Bruce made First Boston one of the premier deal making banks on Wall Street by capitalizing on the merger craze of the 1980’s.
First Boston deals with Bruce Wasserstein’s fingerprints on them include Texaco’s acquisition of Getty Oil, ABC’s sale to Capital Cities and most famously, DuPont’s acquisition of Conoco.
During this latter acquisition, Bruce pioneered a tactic he called the “front-end loaded two-step tender” – where DuPont would acquire a limited, but majority, stake in Conoco upfront and buy the rest of the shares at a lower price at a later date.
Using this tactic, Bruce successfully outmaneuvered oil giant Mobil and beverage giant Seagram and allowed his client to pay less for the business, though Seagram did end up owning 24.3% of DuPont as a result of the deal.
Safe to say, this turned heads on Wall Street and Bruce and First Boston were flooded with new business, prompting Bruce and Joe’s promotion to co-heads of the M&A division, now the second largest in the world behind Goldman Sachs.
As for his competitors, many began to copycat Bruce and use his tricks at their own firms, often to the same success.
Wanting to stay ahead of the competition, and not become a “one trick horse” so to speak, Bruce continued to come up with new tactics to use for his clients and hired like-minded people to help them continue to innovate.
And whilst their tricks were always 100% legal, their use often resulted in SEC scrutiny, as no one had ever seen these tactics before.
A Break With Management
With the M&A division bringing in just over half of all First Boston’s profit throughout the 1980’s, Bruce and Joe began to argue with First Boston’s management.
You see, the pair wanted to divert resources away from the firm’s unprofitable bond trading division and towards their own division, arguing that profit and client satisfaction was better for the firm than losing money was.
But First Boston’s management didn’t see it that way. Instead, they believed that in order for the division to become more profitable, it needed more resources which could be drawn from its overly successful divisions, such as M&A.
After years of increasingly heated debate and being rebuffed, Bruce and Joe both handed in their resignations to First Boston’s management in 1988 and established Wasserstein Perella & Co., their own boutique investment bank.
Taking with them a slew of fellow partners, backroom staff and most importantly clients dealt a huge blow to First Boston’s M&A division and ensured that the new company would be flush of new business right out of the gate.
Indeed, by many accounts when the partners and clients departed First Boston for Wasserstein Perella (later nicknamed “Wasserella” by the press), they continued working on the deals they’d started at First Boston. And Wasserella got the fees for it.
Wasserstein Perella & Co.
One of the firm’s first major deals was KKR’s acquisition of Nabisco and later tobacco giant Philip Morris’s acquisition of both Kraft (1988) and General Foods (1989).
The pair then spent the next half decade or so turning Wasserella into a powerhouse M&A factory that was in many ways a scaled-up version of First Boston’s M&A division from before they left (and without the unprofitable divisions and short-sighted leadership).
The was struck a blow after Joseph Perella left the company Morgan Stanley in 1993, later leaving them to found Perella Weinberg Partners in 2006 with Peter Weinberg, a grandson of longtime Goldman Sachs boss Sidney Weinberg.
But still, Bruce Wasserstein continued to drive the firm’s growth and added many more household names as clients, including Time Warner, and advised on other banking takeovers such as Morgan Stanley-Dean Witter Reynolds and Swiss Bank Corp-UBS.
After only 12 years of running Wasserella, building it through little more than a great reputation and track record, Bruce was approached by the German retail bank Dresdner Bank.
Wanting to expand internationally, Dresdner had acquired British investment bank Kleinwort Benson in 1995, renaming it Dresdner Kleinwort to act as the company’s investment banking arm.
Keen to expand into the US, as most of Kleinwort Benson’s assets were in Europe, Dresdner approached Bruce Wasserstein about a takeover of Wasserstein Perella as it was one of the most respected boutique investment banks in the US at the time.
The $1.5 billion deal was completed in January 2001 and ever the deal-maker, much of this $1.5 billion was used to buy Bruce out.
Interestingly after the merger, Dresdner merged Wasserstein Perella with Kleinwort Benson, forming Dresdner Kleinwort Wasserstein (DrKW for short) which was headed by Bruce.
Leaving Dresdner
However his time at Dresdner was not to last.
He was constantly at odds with his Ivy League superiors who were both jealous of him and looked down their noses at the rainmaker who was more accustomed to walking around the office with his tie askew and shirt untucked than coming across as sophisticated.
Despite a similar corporate environment existing at his own firm, it didn’t take much for Michel David-Weill, then the chairman of Lazard, to convince Bruce to join his firm. Especially since Bruce had long admired Lazard.
In early 2002, Bruce Wasserstein officially joined Lazard citing the then-recent Allianz acquisition of Dresdner as his reason for leaving.
Lazard
Named the company’s new CEO, Bruce’s primary objective was to turn Lazard from a respectable behemoth of a bank into one that could compete with the bulge bracket firms – the most profitable investment banks.
Knowing that in order to do this, he’d need a team of great investment bankers working under him to help him bring in as many clients as possible, his first act at Lazard was to go on a hiring spree.
He lured past colleagues from First Boston, Wasserstein Perella and DrKW with high basic salaries and an eyewatering bonus structure later copied by other banks (birthing what many have since called Wall Street’s “bonus culture”).
And though expensive, it seemed to have worked, as Lazard attracted not only the best and brightest on Wall Street but many of their clients who were happy to pay Lazard’s huge fees.
Just as he’d done at Wasserstein Perella and First Boston before that, Bruce drew headlines on numerous occasions, such as advising Bank One during its merger with J. P. Morgan Chase in 2002 and the 2007 sale Hollinger International’s assets following boss Conrad Black’s conviction.
He was also quick to end bitter infighting between the partners at the firm, which often saw them attempt to one-up each other at the firm’s expense, and serving as a catalyst for some clients to leave for other banks.
With a focus on growth, Bruce Wasserstein turned Lazard into one of the preeminent bulge bracket banks on Wall Street in only three years and his 2005 decision to take the company public was as controversial as it was genius.
To the decedents of the ruling Lazard family (including the aforementioned Michel David-Weill), the decision destroyed the very thing that had kept Lazard in business for over 150 years: it’s partnership structure.
But taking the company public also gave it access to vast amounts of capital it could use to expand its operations on both sides of the Atlantic and comply with liquidity regulations.
Against the wishes of chairman Michel David-Weill and many others, Lazard was listed on the New York Stock Exchange on May 6 2005 with the stock ticker “LAZ”.
Still ever the deal maker, Bruce Wasserstein wasn’t just going to hand control of his bank to faceless investors. Oh no, he floated the company in such a way that all current and former partners had the controlling share in the firm.
And yes, Bruce had the single largest shareholding of any of them!
Later Life
Whilst many hailed Bruce Wasserstein as an investment banking guru for taking Lazard public, the move put a permanent strain on his relationship with Michel David-Weill, with the two men feuding over Bruce’s taking the company public.
Even as Bruce signed clients like corporate raider Carl Icahn (for a failed takeover of Bruce’s old client AOL TimeWarner, which netted Lazard $26 million in fees), David-Weill continued to state that he regretted hiring Bruce.
Not long after taking the firm public, Bruce was elected chairman of the firm whilst retaining his position as CEO.
It was at Lazard where Bruce first coined the term “Pac-man defense” in reference to a technique he’d used several times throughout his career where the target of a hostile takeover attempts to acquire its would-be buyer.
In 1988, Bruce established a private equity division of Wasserstein Perella & Co., called Wasserstein & Co., which he used to manage and invest his personal wealth and later, that of his family.
Upon Dresdner Bank’s acquisition of Wasserstein Perella in January 2001, Wasserstein & Co. was spun off as an independent company owned by Bruce who put most of the proceeds of the Wasserstein Perella sale into the company.
Long interested in media – having worked at the Michigan Daily newspaper back in college – Bruce used Wasserstein & Co to invest in media outlets, beginning with American Law Media (AML) in 1998.
In 2004, he added New York Magazine to Wasserstein & Co.’s ever-growing media empire and sold AML to Inclusive Media for a reported $630 million in 2006.
Unlike many other billionaire owners of media companies, Bruce never attempted to assert editorial control over his publishers, instead respecting the freedom of the press even if he didn’t personally agree with it.
In his later life, he also become something of a philanthropist, donating $25 million to Harvard Law School, his alma mater, in 2007 for construction of an academic research wing later named Wasserstein Hall in his honor.
Death & Legacy
Admitted to hospital with an irregular heartbeat only days before, Bruce Wasserstein appeared to be recovering when he suddenly passed away on October 14 2009. At the time of his death, he was halfway through the Kraft Foods-Cadbury merger.
Just as he always said he would, he died with his boots on.
At the time of his death, he was worth a rumoured $2.3 billion which was to be split between his five children (controversially, he had an illegitimate daughter who was cut out of the will, later leading to years of court battles).
Having passed away on a trading day and knowing that announcement of his death would have a profound effect on Lazard’s stock price, Lazard’s shares were suspended prior to the announcement of his death.
His death was announced by a Lazard spokesperson and obituaries in several major newspapers and business publications.
A memorial service was held in his honor on December 7 2009, featuring both eulogies and stories about the man they all respected. Many Wall Street veterans came out to share their stories of the most un-investment banker-like investment banker they knew.
Remembered mostly for his much-hated nickname of “Bid ’em up Bruce” for his seeming knack for getting buyers to pay more than they intended to for the assets his clients were selling, Bruce spawned a new generation of bankers molded in his image.
Today, many prospective bankers study the life and tactics of Bruce Wasserstein to give them an edge over the competition, outright copying or replicating much of what he did to become so successful.
For banking management, Bruce’s laissez-faire style of leading is almost legendary.
He would give his subordinates near-full autonomy and space to operate. He wouldn’t micro-manage them but he did hold the final say over any decisions. Not that he needed it though – fear of upsetting him was enough for his subordinates to always get everything right. Always.
Aside from just his life’s story from the angle of biographers, Bruce Wasserstein also wrote and published several books before his death detailing the intricacies many of his most famous strategies allowing future generations to learn from, and build on, them.
Has the story of Bruce Wasserstein inspired you? Tell me in the comments!
