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MERCHANT BANKS
- Business History of Private Equity Firms
1762 - Sir Francis Baring established and Francis Baring
Company in London; 1806 - Alexander Baring (son) joined
firm, renamed Baring Brothers & Co., merged with London offices of Hope
& Co. (Alexander worked with Henry Hope); February 26, 1995 - collapsed
after trader, Nick Leeson, lost $1.4 billion in futures contracts
trading.
1798 - Moses Marcus and Gerson opened Warburg bank
in Hamburg (M.M.Warburg & Co), laid foundations for banking dynasty;1934
- Siegmund Warburg fled oppression of Nazi regime, settled in London;
1946 - founded, built S.G. Warburg; 1994 -
acquired by Swiss Bank Corporation (SBC), renamed SBC Warburg - A
Division of Swiss Bank Corporation".
1800 - Irish merchant Alexander Brown established business
in Baltimore, MD; imported Irish linen, exporting cotton, tobacco to
Britain.
1810 - William Brown (oldest son of Alexander Brown)
established import/export business in Liverpool, under the name William
Brown & Co.; 1825 - Joseph Shipley joined to finance
merchants shipping goods between Britain, United States, many other
parts of Europe, the Americas; pioneered payment through 'Letters of
Credit'; 1837 - name changed to Brown Shipley & Co.;
1863 - London office opened, business focused largely on
Acceptance Credits, foreign exchange business, deposit banking;
1918 - partnership between Brown Shipley and its American
partners, Brown Brothers & Co., ended, although each continues to act as
agents for the other; firm built substantial business in the wool,
timber, fur trades; 1946 - made transition to
incorporation as limited company; 1957 - leading member of
Acceptance Houses Association, prominent role in London Money Market;
developed 'Investment Advisory Service'; 1992 - acquired
by European bank KBL European Private Bankers; 2005 -
owned directly by new KBC Group NV, one of Europe's largest financial
companies.
1818 - Son of Alexander Brown opened Philadelphia office of
Liverpool merchant bank, Brown Brothers & Co.; January 1, 1931 - W. A. Harriman
& Co. merged with Brown Brothers; Prescott Bush - Managing Partner.
1963 - Lewis B.
Cullman did first LBO: $62.4 million purchase of Orkin Exterminating
With a $1,000 investment.
1970s
- "bootstrap" deals; 1980's - leveraged buyouts;
1990s -private equity".
1985 - Peter G. Peterson (former
Lehman Brothers senior partner), Stephen Schwarzman founded
Blackstone Group with $400,00 in capital; June 21, 2007 - went public;
biggest offering since Google (2004).
September 23, 1998 - 16 major
financial institutions, investors in and lenders to Long Term Capital
Management (LTCM) met at New York Federal Reserve Bank to
determine capital contributions required bail LTCM out - about $$3.5
billion in return for substantially
diluting existing shareholders' stake in LTCM. Control of the firm
passed from the current management to a committee determined from the
outside by the new investors.
January 25, 2008 -
World Economic Forum results of a yearlong study of 5,000 private equity
transactions (randomly chosen) from 1980 through 2005 to determine
whether buyouts create jobs or result in more layoffs (Economic Impact
of Private Equity): 1) private equity does not create more
jobs, but cut, on average, only about 1% more jobs than peers, 2)
two years before buyout, a company cuts, on average, 4% more of its work
force compared with peers (possibly because preparing for sale), 3)
acquired companies, on average, cut 7% of work force over 2 years, but
at same time, added jobs (usually new positions in new locations) at
pace of about 6%, resulting in a net loss of 1%, 4) by 4th, 5th
years of private equity ownership, growth of company’s work force
became similar to its public peers, 5) 6% of all buyouts
eventually end in bankruptcy filing, slightly higher than average for
public companies (buyout companies defaulted at half rate compared with
public companies with similar junk debt ratings), 6)
public-to-private transactions reflected only 6.7% of total number of
buyouts since 1980 (28% of firms acquired, measured in terms of dollar
value). The study did not look at new or lost jobs abroad, did not
examine what would have happened to employment had buyouts not
occurred.
Results contrasted with study commissioned by Private Equity
Council (lobby group) of 42 large companies (selected by buyout groups)
acquired by 8 private equity firms from 2002 to 2005 (World Economic
Forum data did not look at deals from 2003 to 2005); results showed that
employment grew 8.4% at acquired companies.
(Baring), Ralph W. Hidy (1970). The House of Baring in American Trade
and Finance; English Merchant Bankers at Work, 1763-1861. (New York,
NY: Russell & Russell, 631 p. [orig pub. 1949]). Baring Brothers & Co.;
Investments, British--United States.
(Baring), Philip Ziegler (1988).
The Sixth Great Power: A History
of One of the Greatest of All Banking Families, the House of Barings,
1762-1929. (New York, NY: Knopf, 430 p.). Baring Brothers & Co.
Ltd.--History; Merchant banks--Great Britain--History.
(Baring), SEE ALSO: Scandal
(Brown Brothers & Company), John Cosby Brown (1978).
A
Hundred Years of Merchant Banking, a History of Brown Brothers and
Company, Brown, Shipley & Company and the Allied Firms. (New
York, NY: Arno Press, 374 p. [orig. pub. 1909]). Brown Brothers &
Company--History; Merchant banks--United States--History; Merchant
banks--Great Britain--History.
(Brown Brothers), John A. Kouwenhoven (1983).
Partners in
Banking: An Historical Portrait of a Great Private Bank, Brown
Brothers, Harriman & Co., 1818-1968. (Garden City, NY:
Doubleday, 248 p. [2nd ed.]). Brown Brothers, Harriman &
Co.--History.
(Brown Shipley & Co.), Aytoun Ellis (1960).
Heir of Adventure: The Story of Brown, Shipley & Co. Merchant Bankers
1810-1960. (London, UK: Brown, Shipley & Co. Ltd., 165 p.).
Brown, Shipley & Co. Ltd.; Merchant banks--Great Britain. 150th
anniversary of the company.
(Charterhouse Group), Laurie Dennett (1979).
The Charterhouse Group 1925-1979: A History. (London, UK:
Gentry, 175 p.). Charterhouse Group -- History; Great Britain Holding
companies.
(Conrad Hinrich Donner), Bruno W.F. Andresen (1984).
Mit
Stehpult und Tintenfass: Erinnerungen aus dem Kontor einer Hamburger
Merchant-Bank. (Hamgurg, GER: Christians, 239 p.). Conrad Hinrich
Donner (Firm)--History; Merchant banks--Germany (West)--History.
(Jay Cooke & Co.), Henrietta M. Larson (1968). Jay Cooke, Private
Banker. (New York, NY: Greenwood Press, 512 p. [orig. pub. 1936]).
Cooke, Jay, 1821-1905; Banks and banking--United States--History.
(Cullman Ventures Inc.), Lewis B. Cullman (2004).
Can’t Take It with You: The Art of Making and Giving Money.
(Hoboken, NJ: Wiley, 224 p.). Cullman, Lewis B., 1919- ;
Businessmen--United States--Biography; Philanthropists--United
States--Biography. Originated the LBO in 1963 with the leveraged
buyout of Orkin Exterminating Co. (engineered the $62.4 million
purchase of Orkin Exterminating with $1,000 investment); amassed
fortune via LBOs.
(Glyn, Mills & Co.), Roger Fulford (1953).
Glyn’s, 1753-1953. Six Generations in Lombard Street. (London,
UK: Macmillan, 266 p.). Glyn Mills & Co.; Merchant banks--Great
Britain--History.
(Hambro), Bo Bramsen and Kathleen Wain (1979).
The Hambros,
1779-1979. (London, UK: Joseph, 457 p.). Hambro family.
(Indosuez), Hubert Bonin (1987). Indosuez: L'autre Grande B anque
D'affaires. (Paris, FR: Economica, 141 p.). Indosuez (Firm :
France)--History; Merchant banks--France--History.
(Kleinwort Benson), Jehanne Wake (1997).
Kleinwort, Benson: A
History of Two Families in Banking. (New York, NY: Clarendon Press.
Kleinwort Benson Lonsdale (Firm); Bankers--Europe--Biography;
Merchants--Europe--Biography; Kleinwort family; Benson family; Merchant
banks--Europe--History; Germany--Genealogy; Great Britain--Genealogy.
(Kohlberg Kravis Roberts), Sarah Bartlett (1991).
The Money
Machine: How KKR Manufactured Power & Profits. (New York, NY: Warner
Books, 345 p.). Kohlberg Kravis Roberts & Co.--History; Consolidation
and merger of corporations--United States--Finance; Leveraged
buyouts--United States.
(Kohlberg Kravis Roberts), George Anders (1992).
Merchants of
Debt: KKR and the Mortgaging of American Business. (New York, NY:
Basic Books, 328 p.). Reporter (Wall Street Journal). Kohlberg Kravis
Roberts & Co.--History; Consolidation and merger of corporations--United
States--Finance; Leveraged buyouts--United States.
(Kohlberg Kravis Roberts), George P. Baker and George D. Smith
(1998).
The New Finance Capitalists: Kohlberg Kravis Roberts and the
Creation of Corporate Value. (New York, NY: Cambridge University
Press, 257 p.). Economist and Historian, respectively. Kohlberg Kravis
Roberts & Co.; Consolidation and merger of corporations--United
States--Finance; Leveraged buyouts--United States.
(Morgan Grenfell), Kathleen Burk (1989).
Morgan Grenfell,
1838-1988: The Biography of a Merchant Bank. (New York, NY: Oxford
University Press, 348 p.). Morgan Grenfell & Co.--History; Merchant
banks--Great Britain--History.
(Morgan Grenfell), Dominic Hobson (1990).
The Pride of Lucifer:
Morgan Grenfell, 1838-1988: The Unauthorised Biography of a Merchant
Bank. (London, UK: Hamish Hamilton, 482 p.). Morgan Grenfell &
Co.--History; Merchant banks--Great Britain--History.
(Paribas), M’hamed Sagou; preface de Jean-Marie Chevalier (1981).
Paribas, Anatomie d’Une Puissance. (Paris, FR: Presses de la
Fondation Nationale des Sciences Politiques, 245 p.). Paribas (Firm).
(Paribas), Jean Baumier (1988).
La Galaxie Paribas. (Paris, FR: Plon, 273 p.). Paribas
(Firm)--History; Banks and banking--France--History.
(Paribas), Eric Bussiere (1992).
Paribas: Europe and the World, 1872-1992. (Paris, FR: Fonds
Mercator, p.). Paribas (Firm).
(Paribas), Frederic Lordon (2002).
La Politique du Capital. (Paris, FR: Odile Jacob, 347 p.).
Banque Nationale de Paris; Paribas (Firm); Bank mergers--France.
(Schroders), Richard Roberts (1992).
Schroders, Merchants &
Bankers. (Basingstoke, UK: Macmillan, 616 p.). Schroeder family;
J.-F.-Schröder-Bank--History; Bankers--History; Merchant banks--History;
Investment banking--History.
(Tricontinental Holdings Limited), Hugo Armstrong and Dick Gross
(1995).
Tricontinental: The Rise and Fall of a Merchant Bank.
(Carlton, VIC: Melbourne University Press, 333 p.). Victoria. Royal
Commission into the Tricontinental Group of Companies; Tricontinental
Holdings Limited; Merchant banks--Australia--Victoria; Bank
failures--Australia--Victoria.
(M. M. Warburg), Eduard Rosenbaum (1979).
M. M. Warburg & Co.,
1798-1938, Merchant Bankers of Hamburg. (New York, NY: Holmes &
Meier Publications, 190 p.). M.M. Warburg & Co.
(M. M.Warburg M. M.), Eckart Klessmann (1998). M.M. Warburg
& Co.: Die Geschichte eines Bankhauses. (Hamburg, Germany:
Dolling und Galitz, 2025 p.). M.M. Warburg & Co.--History; Banks
and banking--Germany--Hamburg--History. |
