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One of the very helpful activities that I tried to build was a bridge into the bigger Wall Street firms, which had much bigger institutional distribution. At the time Mike Bloomberg was running the Salomon equity desk and I got to know Mike at the Harvard Business School—we were classmates. He was extremely helpful, as was L.J. Tenenbaum at Goldman, who hired Bob Rubin into the business. L.J. had worked for Gus Levy, who was probably one of the great patriarchs in our business at the time. Those two people, Mike Bloomberg and L.J. Tenenbaum, really helped us in terms of navigating and building our block trading operation in the mid- to late-1970s.

When you’re a young firm and you have to compete with major companies that have vast resources and established franchises, you have to build something that is unique and different and that can compete for high-quality talent. Building a culture that had a highly entrepreneurial element, an equity upside, and huge profit participation was one aspect we developed. Our culture was distinctive and included strong leadership with elements of integrity, competitiveness, and an attitude towards winning and having fun. That’s what emerged and was built in the late 1970s to early 1980s.

In the 1990s, we were fortunate because we had built a very robust business with a growth platform that cut across industries from consumer financial service to technology and so on. But many of the companies were large market capital companies that required a much broader set of services and products, and so we were losing clients to mainly the Goldmans and the Morgan Stanleys of the world. We had to figure out a way to build capability in debt and derivatives and other areas where we could stay competitive. So I went out and tried to see if there was a partner who would possibly buy a small piece of the firm and joint-venture with us in a number of these areas.

At that time, there wasn’t a lot of interest in a joint venture and there was a lot more interest in just outright acquiring us. There was already a fair amount of consolidation going on in the industry and I think the watershed event was when Alex Brown sold to Bankers Trust. Our competitors started to get gobbled up by bigger banks and we still needed broader capability, so we decided that the best tack was to sell the firm. That’s how we were eventually sold to Nation’s Bank.

Nation’s Bank Buyout When I looked at Nation’s Bank, they had had some fits and starts in the investment banking business. They had hired a number of high-quality, high-profile individuals to kick-start a business that would be mainly in the high-yield and debt side of the investment banking business. Every time they tried it, it blew up in their face within twelve months. So, when I first met with Hugh McCall, he seemed to be very forthright about the fact that Nation’s Bank had already failed miserably in trying to kick-start and build an investment banking business, and that he was interested in us helping him coalesce and build an investment bank inside Nation’s corporate bank. He liked us because he and Montgomery had clients and product lines in the same industries. It was on that basis that we thought that a large bank with a distinctly different culture would be a good partner, but we were also somewhat leery about how the process would unfold.


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