His Money Talks, But in a Whisper
You may never have heard of Stephen Schwarzman or the firm he runs, the Blackstone Group. But while your attention may have been elsewhere, he has been reinventing U.S. business in a deliberately low-key manner as one of the biggest players in an unprecedented migration of companies from public to private hands some $370 billion in deals in the U.S. this year alone.
Buyout funds, rebranded as private equity (more genteel, no?), are back and bigger than ever. But unlike the renegade raiders of the 1980s, dealmakers like Schwarzman polished, well connected, very highly compensated are often welcomed by CEOs tired of the stock market's short-term profit demands. Private-equity firms are even willing to run the outfits they buy (until it's time to sell) rather than bust them up. If the earlier buyout era was emblematized by the battle for RJR Nabisco, then the symbol of the new wave is Blackstone's record-breaking purchase of Equity Office Properties Trust in November a not-so-sexy name, sure, but at $36 billion, a deal that shows that only the very biggest companies are out of reach of the buyout shops. "Transactions above a certain size aren't really practical," Schwarzman told TIME, "but no one is sure what size that is."
The result is some very powerful people in some largely unscrutinized places. If you add up the sales from all the businesses Blackstone owns, the firm ranks among the 15 largest companies in the Fortune 500, making Schwarzman CEO of an outfit the size of Home Depot or Bank of America. It's hard not to pay attention to that.