Blackstone bio won’t net Schwarzman much carry

October 15, 2010

A new Blackstone biography looks like one of the less impressive investments Steve Schwarzman has made — with his time. The private equity firm’s co-founder cooperated on the chronicle, entitled “King of Capital,” penned by two financial reporters. It’s true he will have gotten his side of the story — as do co-founder Pete Peterson, Blackstone president Tony James and other partners — woven into versions provided by friends, foes and former colleagues. But the abundant deal details and scant personal ones don’t add much to a public image that is largely a caricature of self-interested capitalism.

Some well-crafted set pieces, including an early hapless fundraising trip that leaves Schwarzman and Peterson standing in a downpour without a check, an umbrella or a taxi, help nudge the narrative along. What resonates most, however, is not the kind of financial drama found in tales like “Barbarians at the Gate” but rather a litany of buyout minutiae accompanied by some acknowledgments and score-settling. There’s ample space devoted to the significance of Schwarzman’s recruitment of James, for example, and to laying many failed deals at the feet of former partner David Stockman.

Overall, despite three years of thorough reporting and painstaking — and successful — efforts to make such intricate material accessible, it’s hard to understand for whom the book is written. Those who know Schwarzman by reputation, cocktail party or deal negotiation will find few, if any, revelations. Hearing an anonymous investor say Schwarzman “always has a few off-the-cuff zingers that leave heads shaking” doesn’t do much to round out a man who has been widely quoted likening President Barack Obama’s supposed attacks on Wall Street to Adolf Hitler’s on Poland.

The buyout nuts and bolts can grow monotonous too. Maybe Wharton students will learn something from the nitty-gritty of Blackstone’s impressively profitable buyout of Celanese. But not even the pointiest head on Wall Street, let alone a curious financial novice, will enjoy a slog through the UCAR transaction. Even on the personal level, does anyone care that Schwarzman still holds a grudge against former Shearson boss Peter Cohen? Probably not even Cohen.

Though no hagiography, the book wraps up with a rather clumsy apology for Blackstone and the whole private equity industry. A few academic reports and case studies suggesting Blackstone and fellow LBO artists have created value are likely to ring hollow to a reader who has just digested 300 pages of Schwarzman making billions by way of dividend recaps, fast flips and his firm’s own impeccably timed IPO.

It is “no sin,” the authors write, to make boatloads of money using leverage and a shrewd understanding of the business cycle. If unaccompanied by greed or pride, this might be fair enough comment. But the choice of words becomes trickier to justify given the event used as the book’s opening scene and most people’s strongest image of Schwarzman: his famously ostentatious and expensive 60th birthday party in 2007, for which he brought in Rod Stewart to perform for hundreds of New York’s glitterati. Meanwhile, telling financiers that Schwarzman has uncanny dealmaking instincts and is much more than a quick-buck artist feels like preaching to the choir.

Overall, the warts-and-all account of Blackstone’s origins and 25-year life so far turns out more like a reference book than a gripping yarn. The “remarkable rise, fall, and rise again” tension promised in the book’s subtitle rarely emerges. Schwarzman may be glad to have a company history of sorts. But as far as his own legacy goes, the book provides a very limited return on his effort.

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