Centerview: the Wall St power brokers confronting a rare rupture 

David Handler made sure he signed the documents this time. Last summer, the veteran investment banker authorised and delivered a formal request to his then employer, Centerview Partners, seeking confidential details about its financial performance.

He believed Centerview’s two founding partners, Blair Effron and Robert Pruzan, had been seeking to expel him from the firm, depriving him of a Centerview equity stake potentially worth several hundred million dollars.

His request for financial information related to a dispute over a decade-old partnership agreement that Handler admits he never signed — but whose economic terms the founders had at least partially honoured ever since. 

Handler had joined the New York-based boutique investment bank in 2008 as one of its first partners and both sides prospered as the firm grew to be an adviser to some of the biggest companies in the world.

In its 17-year existence, Centerview acquired an envied reputation on two fronts. First, it earned staggering fees each year for advising on a disproportionate number of the largest transactions in the market despite keeping a modest headcount; in the boom year 2021, its revenues reached $1.5bn.

The other is that, until recently, it had largely avoided the kinds of internal psychodramas that have paralysed Wall Street’s biggest players, owing to what Centerview believes is its conscious effort to reward collegiality.

Centerview never shared the papers Handler requested. Last August, in response, he resigned from the firm, commenced legal proceedings and announced he was launching his own technology boutique, Tidal Partners, bringing with him nearly a dozen junior and senior Centerview colleagues.

Both sides are now litigating in a Delaware court over the bitter parting, each accusing the other of treachery. Handler in legal papers has described Centerview’s attempt to deprive him of equity as “surreptitious misappropriation” as reprisal for challenging the founders.

The firm has countered that Handler took home “hundreds of millions of dollars” in pay during his years there and is owed nothing more, describing him as a “disgruntled employee” attempting to “divert attention from his own bad acts”.

Centerview also accuses him of a “shameful” breach of his employment contract by allegedly forming Tidal while still employed by Centerview.

The bitter dispute comes at a pivotal time for Centerview after years of spectacular success. Its admirers compare it to Lazard or Goldman Sachs before their respective IPOs — a close-knit circle of supremely connected power brokers quietly shaping commerce around the world.

“To be able to create such a firm from scratch is a rare accomplishment,” says Antonio Weiss, a former executive at Lazard.

Others wonder if Centerview risks running out of road having become, as one former partner puts it, “too big now for what they were good at, but too small for what they want to be”.

Rooms with a view

Centerview was founded in 2006 by Effron and Pruzan along with Stephen Crawford, who had been chief financial officer of Morgan Stanley, and Adam Chinn, a prominent deals and executive pay lawyer from Wachtell, Lipton, Rosen & Katz.

The foursome shared the view that the new firm must not bear their surnames, christening it Centerview to mark its original headquarters that overlooked the Rockefeller Center in midtown Manhattan.

Their mission was to act as a sounding board for chief executives, directors and the other decision makers at big or influential companies — not just intermittently on major transactions, but more consistently on continuing challenges.

Pruzan and Effron had previously been specialists in consumer products and packaged food companies but believed that thoughtful, senior-level advice untethered to any particular deal would resonate across other industries. 

Bob Iger, the long-serving chief executive of Walt Disney, recalls a presentation that Centerview gave to senior managers at the entertainment group several years ago. “There was something about this presentation that was articulated smartly and wasn’t a sales job. I put Blair at top of the list in quality of analysis and authenticity,” he says.

But prising boardroom doors open remained tough for a new firm with a limited record. 

“The largest companies, when facing decisions of enormous opportunity but also risk, tend to look to firms that have established relationships and a brand and a history of advising on important decisions in similar circumstances,” says Weiss, the former Lazard banker.

Robert Rubin, the former US Treasury secretary and longtime Goldman Sachs executive, who joined Centerview as a senior counsellor in 2010, says that in the early days he and Effron were often received politely, but discussions would often end in rejection: “I can’t do business with you, nobody has heard of you, and I couldn’t explain hiring you to the board and shareholders.”

In that instance and others, the firm offered to complete a free project to showcase its abilities — this was often enough to overcome such initial resistance.

Centerview notched some big wins in the early years from old and new clients including advising the likes of AB InBev, Altria, Kraft Foods and Rupert Murdoch’s News Corp.

Yet its biggest coup was perhaps in hiring staff rather than signing up companies. The swingeing cuts to headcount at big investment banks in the aftermath of the 2008 financial crisis were a boon for boutique operators such as Centerview.

Big companies started rethinking the risks of relationships with massive financial institutions peddling credit lines, interest-rate swaps and other services alongside sensitive M&A advice.

At the same time, a boutique banker would not be forced to market the latest derivative product du jour, nor find themselves at the mercy of esoteric trades gone bad from some distant corner of the firm. For the right person, who did not require the safety net of a sprawling institution, the independent model could prove liberating. 

Junior and mid-level bankers were themselves uncommonly happy to work at Centerview with its above average pay, tight-knit culture and opportunity to interact closely with senior bankers and clients. Several made the successful transition from junior analyst or associate to partner.

“It was a blast; I loved that place,” recounts one person who started at Centerview in the early 2010s as an entry-level hire and stayed for several years. “I was surprised how nice Centerview was,” says another banker who had worked elsewhere before a near decade-long stint at the company.

In the firm’s perhaps most consequential moment, in 2009 it hired three Merrill Lynch healthcare dealmakers: Alan Hartman, Mark Robinson and Richard Girling. This nascent healthcare group would quickly establish itself as go-to advisers to various big pharma clients including Pfizer.

A few years later, Eric Tokat, a mid-level hire who had come with the Merrill Lynch team, would establish himself as the top banker to emerging biotech companies seeking to sell themselves, most notably the landmark sale of Kite Pharma to Gilead Sciences for $12bn in 2017.

Whatever Centerview’s stated aversion to simply processing transactions, the cash was rolling in. New analysis from a previous Financial Times study of deal fee regulatory disclosures filed between 2014 and 2016 showed a median Centerview fee of $30mn for each sale process. That figure was ahead of Goldman Sachs and Morgan Stanley, demonstrating Centerview’s pre-eminence in blockbuster situations. 

Effron and Pruzan hired only a handful of senior bankers each year, leaving the windfall to be split among a small group who routinely could take home tens of millions of dollars annually. In the select circle was Handler.

A self-sufficient star

Handler, now 58, had a clear sense of what consumed the attention of high-level corporate executives and directors. Among the reasons, when he was a junior banker in his twenties, he had so impressed the top brass of the listed casino operator, Penn National Gaming, now called Penn Entertainment, that they invited him to join its board where he remains today.

As a deal adviser, Handler specialised in working with technology hardware companies at Bear Stearns and later UBS. In 2008, Effron brought Handler and his co-head of technology banking at UBS, David St Jean, to Centerview as the firm’s first non-founder partners. 

Handler quickly scored big wins and was precisely the kind of colleague Effron and Pruzan needed. Handler had strong existing client relationships and was experienced enough to front pitches and board meetings without the requiring the founders oversight.

Handler was particularly close to John Chambers, then chief executive of networking giant Cisco Systems, whose internal strategy team leaned heavily on Handler’s group for deal analyses. 

In 2016, Handler relocated to Palo Alto to establish Centerview’s first physical presence in Silicon Valley. In New York, he had become a successful but, at times, a polarising figure. His intensity was enough that some junior bankers balked. “He could grind them into the floor,” says one Centerview banker who knows Handler well. “David loves banking. He is the real deal . . . he lives and breathes it.”

The pandemic proved the flashpoint for an irreconcilable breach. Handler relocated to Miami in 2021 for family reasons. Others at Centerview believed that Handler preferred to stick to a handful of key clients, as the firm desired a more vigorous effort to tap a burgeoning sector. Soon after, Centerview hired a trio of Bank of America technology bankers to lead the Palo Alto office.

Handler concluded that Pruzan and Effron were attempting to ease him out of the firm, even as his clients were announcing deals that would generate tens of millions in revenue for Centerview.

His ire, according to court filings and interviews, is largely directed at Pruzan, the litigation inviting scrutiny of the respective roles of Effron and Pruzan within Centerview. 

While the firm has eschewed formal leadership titles, a Centerview veteran describes Effron as the “outward-facing” chief executive who leads front-page deals, appears on television and at conferences and helps influence the debate on economic policy within the Democratic party — he, for example, counselled Iger when he was considering seeking the party’s 2020 presidential nomination.

Pruzan, known as a master of complex deal structures, spent the 1990s at the storied boutique firm Wasserstein Perella and eventually became its president. He later started his own firm, Pruzan & Co, which was a predecessor to Centerview — Effron’s first paychecks were stamped “Pruzan & Co”.

Although both co-founders have driven the firm’s culture, Pruzan takes the lead on internal management, a crucial function as the bank has widened to 500 employees and 70 partners.

Handler believed Pruzan had come to enjoy wielding power against him and his team. Effron, by then busy as perhaps America’s leading boardroom whisperer, himself had kept cordial ties with Handler.

Handler’s quarrel with Centerview could be traced back to his 2008 recruitment. Eager to get him to join, the firm had offered Handler and St Jean a generous package that included a significant split of the firm’s revenues and profits, irrespective of the technology group’s own performance. Both the firm and the tech group quickly rocketed and Handler each year pocketed tens of millions of dollars.

By 2013, Effron and Pruzan had repeatedly attempted to recut Handler’s deal to moderate his near-term payouts. Negotiation sessions with Handler were held at the tony University Club in Manhattan and lengthy draft employment contracts were exchanged.

Handler contends that eventually he agreed to reduce his annual earnings in exchange for what he believed was about 7 per cent of Centerview’s underlying equity.

Handler, however, never signed the agreement as the two sides could not hash out the restrictive covenants that should govern if he ever wished to leave the firm. Still, Handler maintains that his pay and stature in the subsequent years reflected the contract terms and that this posture implied the firm had tacitly approved the agreement.

Centerview simply argues that no valid contract exists to enforce today. Its court papers add that even if an oral contract was legitimate, any equity he possessed could simply be repurchased by the firm at a nominal price, a standard provision that applied to any Centerview partner who departed the firm prior to an IPO or sale. 

A July hearing in the Delaware Court of Chancery is set to resolve Handler’s initial request to review Centerview’s accounts as an alleged formal partner in the most valuable Centerview vehicle.

Mutual regrets

Those close to both parties say that, despite the harsh recriminations volleyed in legal filings, each laments that a 15-year relationship which had been wildly enriching for everyone had since descended into open warfare. 

Handler’s Tidal Partners, has begun to publicise its maiden deals. At the same time, Centerview continues to thrive. This year, it has found itself managing the sale of Silicon Valley Bank’s remaining assets, advising the board of Credit Suisse in the run-up to its state-brokered takeover by UBS, and assisting gold miner Newmont on its $17bn acquisition of Newcrest. 

In April, it elevated two of its partners, both in their forties, to the newly created title of co-presidents, the first hints of a fresher generation beyond Effron and Pruzan. The founders are near 60, though neither is expected to soon slow down.

One co-president is Tokat, part of the broader life sciences team that is the firm’s most reliable revenue stream. The other, Tony Kim, is an original Centerview banker who leads the consumer products practice and has been active in internal growth and operational projects.

Kim’s appointment has been universally hailed by Centerview insiders including Handler partisans who praised Kim’s integrity and leadership.

But the longer-term questions about Centerview’s future remain.

The fine line between glory and desperation has been on full display in 2023. The once-gilded private partnerships of Goldman Sachs and Lazard, are now both subject to the unstinting glare of the public markets and have been forced into deep lay-offs this year.

The star of Greenhill & Co, the Centerview of the 1990s and early 2000s, fell far enough over the past decade for it to sell itself to Japan’s Mizuho for $550mn. The overnight implosions of Silicon Valley Bank and First Republic are cautionary tales of hubris and fragility. 

For now, there remains little hint of vulnerability at Centerview and it is making big pushes in the UK and France. But success invariably prompts its own questions. The firm has no outside capital and both Effron and Pruzan are likely to have accrued at least hundreds of millions in paper wealth.

The way to unlock the enormous wealth that Centerview has created for its partners while managing succession, growth and keeping the excitement of its early days will be its toughest puzzle.

Large underwriters have repeatedly pitched Centerview on an IPO, potentially valuing the group more than $5bn. The founders have demurred so far, in part to protect the firm’s ethos. Notably, France’s Rothschild & Co this year decided it will depart the public market.

Zachary Karabell, author of a book chronicling the history of Brown Brothers Harriman, an elite US banking partnership that has lasted more than two centuries, reflects that the more successful a firm is, the trickier to maintain cohesion and specialness.

“It’s better to stay private and closely held for as long as possible,” explains Karabell. “That is the only way to maintain control of the culture.”

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