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King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone
 
 

King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone [Kindle Edition]

David Carey , John E. Morris
3.4 out of 5 stars  See all reviews (5 customer reviews)

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Review

King of Capital aspires to be a serious portrait of Blackstone and the way that Schwarzman so brilliantly built it up, scoring numerous coups along the way and avoiding the mistakes of many competitors. And it does a fine job in what it sets out to do. --The Financial Times, 20/10/2010

New book offers fresh portrait of buyout powerhouse...The authors were given rare access to Blackstone s inner circle and have produced an intimate portrait of the secretive firm. --Financial News, 18/10/2010

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Strippers and Flippers . . . or a New Positive Force Helping to Drive the Economy . . .
 
The untold story of Steve Schwarzman and Blackstone, the financier and his financial powerhouse that avoided the self-destructive tendencies of Wall Street. David Carey and John Morris show how Blackstone (and other private equity firms) transformed themselves from gamblers, hostile-takeover artists, and ‘barbarians at the gate’ into disciplined, risk-conscious investors.
The financial establishment—banks and investment bankers such as Citigroup, Bear Stearns, Lehman, UBS, Goldman Sachs, Merrill Lynch, Morgan Stanley—were the cowboys, recklessly assuming risks, leveraging up to astronomical levels and driving the economy to the brink of disaster.
Blackstone is now ready to break out once again since it is sitting on billions of dollars
that can be invested at a time when the market is starved for capital.
 
The story of a financial revolution—the greatest untold success story on Wall Street: Not only have Blackstone and a small coterie of competitors wrested control of corporations around the globe, but they have emerged as a major force on Wall Street, challenging the likes of Goldman Sachs and Morgan Stanley for dominance.
 
Great human interest story: How Blackstone went from two guys and a secretary to being one of Wall Street’s most powerful institutions, far outgrowing its much older rival KKR; and how Steve Schwarzman, with a pay packet one year of $398 million and $684 million from the Blackstone IPO, came to epitomize the spectacular new financial fortunes amassed in the 2000s.
 
Controversial: Analyzes the controversies surrounding Blackstone and whether it and other private equity firms suck the lifeblood out of companies to enrich themselves—or whether they are a force that helps make the companies they own stronger and thereby better competitors.
 
The story by two insiders with access: Insightful and hard-hitting, filled with never-before-revealed details about the workings of a heretofore secretive company that was the personal fiefdom of Schwarzman and Peter Peterson.
 
Forward-looking: How Blackstone and private equity will drive the economy and provide a model for how financing will work.

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1 of 1 people found the following review helpful
4.0 out of 5 stars WORKMANLIKE 27 Mar 2012
By DOPPLEGANGER TOP 500 REVIEWER
Format:Hardcover|Verified Purchase
This journey through the world of buy-outs and private equity and in particular Blackstone and it's co-founder and longtime driving force Steve Schwarzman, is comprehensively told by the authors David Carey and John E Morris, both experienced financial journalists. It is a very complete account of virtually (if not all) of the deals, both successes and failures undertaken by Blackstone from its start in 1985 through to fairly recently, and it explains in understandable jargon all of the 'in's-and-out's' and technicalities of the Private Equity money making merry-go-round.

The book also strives to give a balanced view on the whole business, ethics and usefulness to society of Private Equity buccaneers from Knights on White Horses riding to save ailing businesses to bloodsuckers interested only in lining their own pockets with little or no regard for others. The reader is left to make his own mind up in this respect.

However, I found that, whilst "King Of Capital" was a well researched and compiled book that was instructive as well as informative, it was perhaps a tad short of instilling a sense into the reader of the 'passion' and cut and thrust that surely must be a involved in the wheeling and dealing of company take-overs and buy-outs. Steve Schwarzman is undoubtedly some hell of a good business man and deal-maker but by the end of the book I did not feel that I 'knew' the man - perhaps this enigmatic persona is what has kept him on top of the pile?
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1 of 1 people found the following review helpful
3.0 out of 5 stars Printing Issues 11 Jan 2011
By JJF0411
Format:Hardcover
Prior reviewers have mentioned issues with the quality of the printing. I have to reinforce those experiences. The content of the book is interesting, well written and well researched. The appearance of the book is appalling. Pages have been badly cut, the paper on which it is printed is of a very low grade and my copy has a number of misaligned pages. Not sure why the publishers would send product in this state. Detracts from the book itself.
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Format:Kindle Edition
King of Capital, about Blackstone Capital, and it's head, Steve Schwarzman, is a great read - very underrated.

Schwarzman was at Lehman's in the 80s during the first LBO boom and formed Blackstone as a part M&A boutique, part buyout shop, with a partner in 1985. Getting business was tough at the start, before a huge run of successes applying the LBO formula, often in partnership with a customer, supplier or someone with a strategic interest in the target.

The S&L crisis and two credit crunches in the 90s stalled the debt available for periods, they occasionally didn't get the management-led improvements they sought from businesses. 2/3 of the investments Blackstone made in 2000 at the height of the market were wipeouts. (The same pattern replicated itself in 2007 when the credit markets crashed and the economy collapsed).

But the company is still worth $22b today, and the formula applied since the 80s is broadly the same, albeit improved.

And that's the interest part of the book - the mechanics and financial engineering of LBOs and private equity. If you're ever looking for investment, it pays to know what drives your buyer and what model he's got to meet.

The Mechanics of an LBO
* The buyout firm put down raised equity as a down-payment on the purchase of the target company. But the company, not the buyout firm, will borrow money. Hence buyout investors look for companies that a) produce enough cash to cover the interest on the debt, and b) are likely to increase in value. The nearest analogy is an income property where the rent covers the mortgage and expenses.
* LBO's also enjoy a generous tax break. They deduct the interest on their debt as a business expense.
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2 of 4 people found the following review helpful
3.0 out of 5 stars Poor print quality 3 Dec 2010
Format:Hardcover
Just received the book, but have to say that it has been poorly printed. Great cover, but the pages are all uneven and with ragged edges. Not sure if this is the style of the book or it has just been poorly printed?
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0 of 1 people found the following review helpful
3.0 out of 5 stars OK 9 Sep 2013
Format:Paperback|Verified Purchase
BORING AND PEDANTIC WE'VE READ IT ALL BEFORE AND BY BETTER AUTHORS
TOO MANY BOOKS OF THIS GENRE WITH NOTHING DIFFERENT TO SAY !!!!!!!!!
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Popular Highlights

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&quote;
The losses taught the firm several lessons, he says. First, “don’t pay too much when you’re buying cyclicals,” he says. Second, “don’t have ambitious turnaround expectations for medium-sized companies. Don’t expect to reinvent them.” Third, if an investment calls for reengineering operations, “don’t have it be a Blackstone-manufactured plan.” Rather, develop a plan in consultation with seasoned executives and consultants knowledgeable enough to judge if the plan will fly. &quote;
Highlighted by 202 Kindle users
&quote;
That way, when the business was finally sold, the buyout firm reaped all the proceeds because there was no debt to pay off. A second way to generate a gain is to boost cash flow itself, through revenue increases, cost cuts, or a combination, in order to increase the company’s value when it is sold. Using cash flows, there is also a third way to book a gain, without an outright sale. If a company has paid down its debt substantially, it can turn around and reborrow against its cash flow in order to pay its owners a dividend. That is known as a dividend recapitalization. &quote;
Highlighted by 161 Kindle users
&quote;
Prudential insisted that Blackstone not collect a dime of the profits until Prudential and other investors had earned a 9 percent compounded annual return on every dollar they’d pledged to the fund. This concept of a “hurdle rate”—a threshold profit that had to be achieved before the fund manager earns any profits—would eventually become a standard term in buyout partnership agreements. &quote;
Highlighted by 136 Kindle users

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