Can Centerview Partners become the next Goldman Sachs?
Centerview contemplates its next chapter
In the early days of Centerview Partners, talks with sought-after clients often ended in rejection. Despite its well-connected co-founders, hailing from Wall Street’s most powerful banks and law firms, the boutique advisory was little known outside of financial circles.
Robert Rubin, the former US Treasury secretary and longtime Goldman Sachs executive, said that when he joined Centerview as a senior counsellor in 2010, the company had to offer to complete projects for free to prove itself.
But that was then. After years of spectacular success, the firm — often compared to Lazard or Goldman before their respective IPOs — is on the cusp of greatness.
If it doesn’t get in its own way, that is.
Part of Centerview’s mystique comes from the fact that it has, until recently, largely avoided the kinds of internal rifts that have hamstrung Wall Street’s biggest players.
The 2008 financial crisis provided a lucrative opening for boutique operators like Centerview as corporations began to rethink getting their M&A advice from the same sprawling financial institutions peddling risky financial products.
Centerview emerged as a safer and more jovial alternative to big banks with potential ulterior motives or exposure to bad trades from other parts of the business. It also boasted a formidable roster of dealmakers under founding partners, Blair Effron and Robert Pruzan.
But a bitter legal battle between the pair and David Handler, who joined the New York-based boutique investment bank in 2008 as one of its first partners, has shown a rare rupture inside a firm best known on Wall Street for its collegial culture.
Handler resigned from the firm in August, before starting legal proceedings and announcing he was launching his own technology boutique Tidal Partners — taking nearly a dozen junior and senior Centerview bankers along with him in the process.
The feud, detailed in this Big Read by DD’s Sujeet Indap and James Fontanella-Khan, isn’t the only problem weighing on the firm.
Like many of its boutique investment banking peers, Centerview faces the ultimate question: to list, or not to list.
Large underwriters have repeatedly pitched Centerview on an IPO that could potentially value the group at more than $5bn. The founders have demurred so far, in part to protect the firm’s ethos.
Perhaps they’ve also seen what can happen when it goes wrong.
France’s Rothschild & Co decided this year to depart the public market amid a global slump in dealmaking. Investment banking pioneer Greenhill & Co is preparing to sell to Japan’s Mizuho Financial Group, meanwhile, rival Lazard is grappling with its laggard share price and steep lay-offs (more on that later.)
Nevertheless, Centerview leads the pack among boutique advisory peers in terms of dominating blockbuster deals.
But will it be enough? As one former partner put it to DD, Centerview is “too big now for what they were good at, but too small for what they want to be”.
As the dealmaking slump weighs on its larger publicly listed rivals, Centerview is for now better off under the control of its uber-connected circle of dealmakers.
So long as the internal power struggles end with Handler.