The private equity industry is a relatively new market phenomenon. Despite its youth, its importance in shaping the modern-day financial landscape cannot be discounted. Private equity first came to prominence in the leveraged buyout mega-deals of the early 80s, as the corporate raider joined the financial community. But the true rise of private equity coincides with the rise of one figure in particular: Stephen A. Schwarzman.
Schwarzman’s Blackstone equity firm landed in 1985 and hit the ground running. Since his arrival, private equity has evolved from a handful of speculative investment vehicles to a dynamic trillion-dollar industry. And throughout it all, as his moves have been studied and combated by peers and opponents alike, Schwarzman has remained on top.
Schwarzman’s career began at Lehman Brothers in 1972 where he rapidly climbed the corporate ladder, becoming a partner just six years later and emerging as Lehman’s most prominent M&A banker. But his success with the financial services firm was merely the springboard for his true calling, not its focal point. In 1984, the investment bank merged with American Express, and the following year Schwarzman launched Blackstone Group, a joint venture with investment banker—and former Lehman boss—Peter G. Peterson.
In the twenty-three years since Blackstone entered the private equity battlefield, Schwarzman has scored a number of high-profile—and high-profit—victories. Blackstone has succeeded in buying up and spinning off dozens of companies, particularly within the real estate and hotel industries. In February of 2007, Blackstone completed what was at the time the largest-ever buyout, a $39 billion deal for the purchase of Equity Office Properties, the country’s largest owner of office buildings. It followed this acquisition by making an even more monumental decision: on June 22, 2007, Blackstone emerged onto the public market with a share price of $35, netting Schwarzman himself billions.
Schwarzman’s business philosophy tends towards a mixture of assertive market movement and rigid principles of conduct. Blackstone is known for its aggressive bidding strategy, routinely pressuring potential targets to make decisions before competitors enter the fray. But Schwarzman also values integrity in the workplace. He claims to discuss matters of ethics and accountability with all incoming Blackstone associates, and notes proudly that the firm hasn’t had a single scandal in its 23 years of operation.
Schwarzman’s vaulted position as the preeminent figure of the private equity industry has not come without the envy—and even the hostility—of his peers. The publicity garnered through the Blackstone IPO brought into public record just how high the financial rewards are for equity titans like Schwarzman, earning him the disfavor of those who see excess in the place of success. Not helping matters is Schwarzman’s tendency towards the opulent: a Wall Street Journal article detailing a lavish 60th birthday celebration at the Park Avenue Armory is just one of the rounds of ammunition for his critics.
But if Schwarzman has enemies, he seems to be blissfully unaware of it. “I don’t feel like a wealthy person,” he famously told The New Yorker. Indeed, for someone in the entrenched habit of working twelve-hour workdays in spite of his accumulated financial success, one questions whether easy living is Schwarzman’s consideration at all. Another possibility is that the man’s concerns lie in his reputation above all else.
In the same way that he has authored record-breaking deals and hosted luxury-drenched parties, Schwarzman approaches philanthropy with a “take no prisoners” policy. His $100 million gift to the New York Public Library ranks as the largest unrestricted donation to a New York cultural institution ever. Through all of his dealings, Schwarzman has insisted on doing things his own way—on the greatest scale, and to the most well-publicized extent.