Who’s the new Drexel Burnham?
Looking into the background of some of the world’s most successful financier, you tend to spot in a lot of cases the similar background of working at DXL. From Leon Black, Ken Moelis, Rich Handler, David Solomon, Michael Mauboussin, etc etc etc etc. Not only that, but it seemed that they also hold a wide array of expertise (M&A advisory, PE, Equity Research) etc... I was wondering what are in your thoughts in 2020 the banks that are producing the same kind of talent that DXL did in its prime. Whether that be great IB’ers or the best PE associates now etc
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Can you elaborate?
He's saying Michael Milken is responsible, not Drexel.
Tesla, Yelp, youtube, LinkedIn, square all were founded by early PayPal employees and they all were early investors in each other’s ventures, magnifying their wealth. Similar to how Drexel employees went on to build a number of financial institutions. Network effects.
Tiger Cubs are the only modernish day example that comes to mind in the world of finance.
"Legendary" in what sense? For paying $1bn in fines and settlements and spending 2 years in jail after getting caught insider trading and breaking the law?
LOL who throws MS at a factual statement? only at WSO!
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What he accomplished in building a market from scratch and making wild amounts of money certainly makes him a legend, but it is also true that he hurt a ton of people in the process and that shouldn’t be ignored. Investors were left holding the bag when the HY market went belly up and they realized Milken had sold them shit for years just so he could illegally make money on every side of the deal - buying the targets stock through illegal trusts, m&a advisory fees, underwriting fees, feeding private info to hedge funds for favors, etc. Tons of his clients went bust due to Drexel deals gone bad and thousands of people lost their jobs, but he left jail a billionaire. Can’t imagine that doesn’t weigh on his conscience, hence the milken institute.
Milken I believe was only convicted for "parking stock," which I think means he agreed to buy a client's securities and sell the securities back to the client later... so that the client could avoid paying taxes on them, or mask how much of the stock the client actually owned... something to that effect. Basically, he sold junk bonds, and when that market blew up, the government made him the scapegoat and decided to go after him. So basically, yes, he technically violated securities laws, but it seems that the convictions really had very little to do with the actual junk bond market.
In reality, I believe many people feel that he was wronged -- yes, he sold junk bonds, but all along, his theory was that some of the bonds would go into default (after all, these were high risk companies -- hence, the "junk" status). But from a return-perspective, he believed that if you held a diversified portfolio of junk bonds, the high yields you'd receive on all would offset the potential default risk of some.
But the above is related to his investment theory, not his legal culpability. In this person's opinion, he was not the "scumbag criminal who ripped off a nation" that many perceive him to be; instead, he was a man who primarily did a great deal of good, but who -- yes -- apparently violated some obscure securities laws to help a client or two save some money /taxes perhaps a couple of times.
It really is weird how many top tier firms came out of Michael Milken. LA's finance scene is pretty much 100% his doing lol
Apollo is definitely the modern embodiment of Drexel. Leon, Josh, and Marc basically worship at the capitalist altar of Milken.
Drexel, during Milken's time, was basically the market for junk bonds and no one could compete with them. Apollo is without a doubt one of the top PE players but not the top dog.
who is the top dog?
They are one of their own, they can make money out of a shitco that is still a shit co after being owned by them but they always leave with 2x+ their money.
Agreed with the above Apollo is a spin-off of Drexel and seems to be the most similar based on what has been written on this forum
There is no single firm within the modern banking sector that operates on the scale that Drexel did. Milken was the salesman/trader/originator/advisor to the entire high yield/LBO market at the time. Read predators ball to get a picture of how centric Drexel was to the era.
Today, most banking services are commoditized from both an advisory/balance sheet perspective due to a combination of regulation/less risk taking ability. There certainly are banks who dominate their core competency such as Qatalyst in tech M&A or some random french bank in Exotic Equity Derivatives, but doesn’t seem like there is any single firm who is “pioneering” a new asset class/transaction type which would groom talent and create the ecosystem to have a similar effect.
"Some random french bank"....Hmm who could it be? XD
Soc gen i think
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