"Groups turn to Blackstone in Crisis Times"

http://www.ft.com/cms/s/0/425ea204-0d12-11de-a555-0000779fd2ac.html

"There are few people that think the economic crisis is fun: John Studzinski is one of them and he is having the time of his life.

As head of Blackstone's corporate advisory and restructuring practice, Mr Studzinski and his stable of 134 advisers have been riding high on the opportunities being created by companies in trouble.

During the past 18 months, the team has provided counsel to AIG; the government of Ukraine on how to manage its $16.5bn standby loan from the International Monetary Fund; and Chinalco, the state-backed Chinese company that was thrust into the spotlight following its controversial $19.5bn investment in Rio Tinto.

This is in spite of the fact that the Blackstone group, the world's biggest buyout firm, posted a loss of $1.16bn for 2008 and marked down its private equity and real estate holdings by between 20 and 30 per cent.

The unprecedented meltdown of the global financial system is the perfect environment for an investment banker of Mr Studzinski's temperament.

"Every meeting you go to becomes more and more interesting," Mr Studzinski says. "We are advising extremely complex businesses which are in crisis, and there is a theatre to these situations. Sometimes it is the theatre of the absurd."

Helping to untangle the byzantine structure of AIG - which has seen its bailout package inflate to more than $170bn from $85bn last September - is a Herculean task.

"AIG needs brain surgeons not general practitioners to operate on it and restore it to health," Mr Studzinski says. "After the dotcom crash, investment bankers were put through the meat grinder and came out robots."

Mr Studzinski feels he is carrying the legacy of Blackstone's roots, which was set up in 1985 by Steve Schwarzman and Pete Peterson with a $400,000 balance sheet as a mergers and acquisitions boutique. It evolved into one of the largest specialists in leveraged buyouts and real estate deals on Wall Street.

Blackstone's independent status - it is free of conflicts because it does not lend on deals - has also helped the financial advisory team win mandates across the globe.

JPMorgan, for example, had been working with Blackstone on the AIG restructuring until December when it resigned the relationship so that it could work with potential buyers of the insurer's business.

Martin Gudgeon, who is in charge of European restructuring at Blackstone, says being free of conflicts is key to being able to pare back the chaos that surrounds many of today's companies so that the critical issues can be highlighted and solved requires significant experience.

"It is an important skill to be able to persuade the vast array of stakeholders in a company to move from the stages of denial about their loss of value to a compromise agreement," Mr Gudgeon says.

The emotions which surround restructurings and some M&A deals means that clients inevitably either love or hate working with advisers such as Mr Studzinski.

Niall Fitzgerald, the deputy chairman of Thomson Reuters who asked Mr Studzinski to advise him last year when the two media companies merged, is one client who values Mr Studzinski's advisory style.

"John is a very creative thinker who is able to stand back from a particular situation and see the bigger picture. He also very much understands the nature of long-term relationships and will frame his advice in that way rather than focusing only on an immediate deal," Mr Fitzgerald says.

Advising clients not to do deals - something the larger banks are often reluctant to do because of the products they sell around M&A - has not affected the fee pool the financial advisory group has generated for Blackstone."