Bruce Wasserstein

Bruce Wasserstein was the most influential M&A banker of his generation and the architect of the modern hostile-takeover playbook. If Felix Rohatyn was the statesman, Wasserstein was the tactician. Where Rohatyn won mandates with judgment and patience, Wasserstein won them with intensity, process design, and a willingness to outwork everyone else in the room. He believed mergers were engineering problems, and he treated them that way.

Over a 32-year career he advised on more than a thousand transactions worth roughly $1 trillion, ran the M&A franchise at three different firms, wrote the canonical insider account of the era, and became one of the wealthiest bankers in American history. The boutique model he built with Joe Perella in 1988, Wasserstein Perella & Co, was the template that Evercore, Centerview, PJT and Moelis would later copy.

The Brooklyn prodigy

Bruce Wasserstein was born in Brooklyn in 1947, the son of a textile-importer father and a community-volunteer mother. The Wassersteins were the kind of New York Jewish family in which dinner-table arguments produced two extraordinary careers: Bruce in finance, and his older sister Wendy as a Pulitzer Prize-winning playwright. Their mother, Lola, kept a sign on the kitchen wall that read ‘a good name is more valuable than gold.’ Both children took it literally.

Wasserstein entered the University of Michigan at 16 and graduated at 19. He went directly to Harvard, where he earned a joint JD and MBA in just three years instead of the usual four. By 24 he had practised securities law at Cravath, Swaine & Moore, completed a Knox Fellowship at Cambridge, and decided that the practice of law was too slow. He joined First Boston in 1977 as a junior banker.

The First Boston years

His career at First Boston is the founding story of modern hostile M&A. He arrived in the corporate finance department in 1977. Joe Perella, the firm’s head of M&A and a man six years his senior, had been building a small mergers team. Wasserstein joined. By 1979, at 31, he was Perella’s co-head. Together they ran what became the most aggressive M&A practice on Wall Street.

Their tactical playbook was new. Most banks at the time had M&A departments that drafted opinion letters and waited for the corporate finance group to bring them work. Wasserstein and Perella treated M&A as a stand-alone discipline. They prospected. They generated ideas. They told CEOs which targets to attack and which defences to deploy. When a client wanted to bid hostile, they had a written tender-offer playbook ready before the call ended.

Between 1979 and 1988 First Boston M&A advised on Texaco-Getty (the $10 billion 1984 transaction that became a notorious court case), Du Pont-Conoco (a three-way contested bid in 1981 that they won by tactical speed), and the original KKR mandates that produced Beatrice, Storer, Owens-Illinois and ultimately RJR.

• Tactic 1

  The bear hug letter

  A private letter to a target board offering a price well above market. Forces directors to negotiate or face shareholder lawsuits.

• Tactic 2

  The two-tier tender

  Cash for 51%, paper for the rest. Coerces shareholders to tender quickly to avoid the back-end. Eventually outlawed in many states.

• Tactic 3

  The lock-up option

  A friendly bidder secures the right to buy a target's crown-jewel assets, deterring rival bidders. Wasserstein perfected this for Du Pont in the Conoco fight.

• Tactic 4

  The poison pill defence

  Co-developed with Wachtell Lipton lawyers in the early 1980s. Lets a target dilute a hostile acquirer's stake automatically. Changed hostile tactics forever.

RJR Nabisco and the boutique founding

In February 1988 Wasserstein and Perella walked off the First Boston M&A floor on a Friday and announced their own firm on the following Monday. Wasserstein Perella & Co opened with roughly 30 bankers in a midtown office, no balance sheet, and the entire First Boston M&A client list following them out the door. It was the most aggressive boutique launch in Wall Street history.

Eight months later KKR called. The leveraged buyout of RJR Nabisco was about to become the largest contested M&A transaction in history. Wasserstein was lead banker to KKR. The deal closed at $109 per share, or roughly $31.4 billion. Wasserstein Perella collected one of the largest single advisory fees ever paid to that point. The boutique had arrived.

Through the 1990s the firm built out offices in London, Frankfurt and Tokyo. It advised on Time-Warner, Viacom-Paramount, the Bertelsmann transactions, Nokia’s restructuring, and most of the European post-deregulation utility consolidations. At its peak it had under 400 bankers and was generating roughly $500 million in annual revenue, the kind of revenue per head that no balance-sheet bank could match.

In 2000 he sold the firm to Dresdner Bank for stock worth roughly $1.4 billion. Two years later, in a remarkable career pivot, he became chairman of Lazard, the firm he had spent two decades competing against.

Big Deal and the playbook on paper

While running Wasserstein Perella, Wasserstein wrote Big Deal: The Battle for Control of America’s Leading Corporations. Published in 1998, the book runs to 819 pages and is the single most detailed first-person account of 1980s and 1990s M&A by a sitting practitioner. It walks through every major transaction of the period from the inside: who called whom, what each side calculated, where the tactical mistakes were.

The book is still on the desk of every senior M&A banker. The opening section codifies Wasserstein’s tactical doctrine: the first bidder usually wins, speed beats analysis, the board cares about defensibility more than price, the press matters more than people admit, and the willingness to walk away is the only thing that makes advice expensive.

Lazard and the late career

In November 2001 Lazard’s last working chairman, Michel David-Weill, hired Wasserstein to restructure the firm. The mandate was open-ended: clean up the partnership, end the family dominance, and prepare Lazard for the public markets. Over the next three years Wasserstein bought out the older Lazard partners, raised outside capital, restructured the global compensation system, and shepherded the firm to a 2005 IPO at $25 a share.

The IPO made him one of the wealthiest bankers in America. He remained chairman of Lazard until his sudden death on 14 October 2009, at age 61, of a heart arrhythmia. Lazard’s share price fell 8% on the news. There was, briefly, no one in M&A who knew what to do next.

What to learn from Wasserstein

For an analyst or associate, the Wasserstein career is the second necessary reference after Rohatyn. Rohatyn shows you what the senior adviser looks like at the franchise stage. Wasserstein shows you what it takes to get there: relentless tactical mastery, willingness to break with the old firm, and the conviction that M&A is not a relationship business with technical edges, but a technical business that earns relationships once you are demonstrably better than everyone else at the work.