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55 of 57 people found the following review helpful
5.0 out of 5 stars Carey's book is the Definitive Primer on Private Equity - It is Spellbinding
The story begins with the history of private equity. Stephen Schwarzman the ultimate central character in this book is a young mergers and acquisitions partner at Lehman Brothers. Henry Kravis of Kohlberg, Kravis and Roberts (KKR) is doing one of the first private equity buyouts called Houdaille Industries. It's a $380 million dollar deal. Schwarzman is sitting in his...
Published on November 22, 2010 by Richad of Connecticut

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7 of 8 people found the following review helpful
3.0 out of 5 stars Read up on Schwarzman
For a while in 2006 it felt like private equity would buy up the universe. Intoxicated by rising pension allocations and a tidal wave of credit, PE companies acquired anything in their sight. The bonanza was crowned with the extravagant 60th birthday party of Blackstone's celebrity CEO Steve Schwarzman. Then came the hangover. Financial journalists David Carey and John...
Published 18 months ago by investingbythebooks


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55 of 57 people found the following review helpful
5.0 out of 5 stars Carey's book is the Definitive Primer on Private Equity - It is Spellbinding, November 22, 2010
This review is from: King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone (Hardcover)
The story begins with the history of private equity. Stephen Schwarzman the ultimate central character in this book is a young mergers and acquisitions partner at Lehman Brothers. Henry Kravis of Kohlberg, Kravis and Roberts (KKR) is doing one of the first private equity buyouts called Houdaille Industries. It's a $380 million dollar deal. Schwarzman is sitting in his office at Lehman Brothers, and saying how could this be? How could KKR get this done? What are the details? It was a eureka type moment.

Schwarzman orders up the financing document, and can't believe what he is reading. He is looking at a revolutionary financial concept that he never dreamed could exist. He knows that all great achievements start out as merely a thought, and then someone must act on the thought. KKR has already been in the business the better part of a decade when Schwarzman latches onto the concept.

He tries to get Lehman Brothers to buy into the concept. They won't go, even though he explains that with one deal we could make more money than we make in a year doing everything else we do. Ultimately there is a falling out between glamour boy Pete Peterson who is running the firm with Lou Glucksman, the in your face trader who can't stand Peterson. Glucksman wins; Peterson leaves the firm and with Schwarzman and a secretary proceed over time to build Blackstone from nothing, just an idea. Together Schwarzman the young man, and Peterson the old tiger, they build Blackstone into a private equity powerhouse.

It's all here, blemishes and all. You are reading financial history as firms collapse and private equity ascends. Blackstone proceeds to do deal after deal, year after year, making billions for 60 plus partners, Schwarzman would have paydays as big as $400 million in one year, most of it taxed at capital gains rates of 15% because of what is called "the carry".

By 2007, one out of every five mergers would be worldwide would be done by private equity groups. Blackstone with 1000 employees would dominate the industry with just a handful of other players called Carlyle, Apollo, and TPG. They would build the private equity industry into a giant that would take on traditional investment banking firms.

Schwarzman in January of 2007 gives himself a multi-million dollar birthday party by renting the Park Avenue Armory, and paying Rod Stewart a million dollars for a couple of hours of singing. By the way, you really need to know this. I have been in Wall Street for 40 years, whenever you have outlandish things happening like this birthday party, It is ALWAYS a sign of a market top developing, and there is going to be a price to be paid.

Within months of the party, Blackstone goes public with a valuation built up over 20 years equal to one third of Goldman Sachs valuation built up over more than a century. Blackstone has a 1000 employees and Goldman 30,000 plus. Blackstone has 2.3 billion in profits in 2006, and Schwarzman's personal net worth approaches $10 billion. Pete Peterson who is worth a couple of billion is there for the ride as well. Peterson made an absolutely brilliant comment at a luncheon I attended a number of months ago. He said the difference between him and other investment bankers he has known is that "He knows the meaning of the word enough." Think about it, it is profound.

The book tells the whole story from the ground up. It takes you through the public offering, and the ups and downs of the whole industry. You will see how other firms operate as well. After reading this book, there will be no surprises for you as a reader regarding the private equity industry. There is one last vital point that needs to be made and the book talks about it.

In the next few years, the entire industry must refinance the debts of many of the corporations and businesses they have bought through the years. If the money is not there to be borrowed, than it is possible that private equity by itself could be the driver of another financial crisis. I personally believe not.

Whenever these types of crisis hit, they come out of nowhere, and there are only one or two people who predict them, and they had luck on their side. You are dealing with an outlier event or what some people now call a black swan event. I promise you will love this book, and thank you for reading this review.

Richard C. Stoyeck
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62 of 70 people found the following review helpful
5.0 out of 5 stars A Captivating Read - I Finished It In a Day, October 6, 2010
This review is from: King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone (Hardcover)
My favorite Stephen Schwarzman story is a personal one. I used to work at Lehman Brothers as an investment banker. We were (of course) bookrunners on the Blackstone IPO, and as was typical for every other IPO, the management of the company comes and teaches our traders about the value of the company. They, in turn, go and pitch the stock to their clients.

Usually it's the CEO and CFO of a company generating about $20mm of net income, an $86mm IPO, and we would struggle to fill the room. In this case, it was Stephen Schwarzman. The man was already a billionaire several times over, and the room was standing room only. Dick Fuld himself came down from the perch of the 33rd floor, and told a room full of his own employees and Stephen Schwarzman, "If we do this IPO right, Steve will be worth more than this whole company."

Boy, he had no idea how right he was.

When I heard this book was coming out, the finance nerd in me eagerly awaited and found it which local store would get it the fastest because I didn't want to wait for the online shipping time.

So, I bought it yesterday and read it in a day. It's awesome. Steve is a genius in so many ways, and the book does a good job of balancing personal/lighter stories along with the heavier finance stuff. You learn about Pete Peterson (author of the scary Running on Empty), and how together, they formed what's still the worlds largest PE firm.

I'm being purposly vague because I want people to read and experience this book for themselves.

Get it, read it. You won't be disappointed.
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35 of 42 people found the following review helpful
4.0 out of 5 stars If you like this kind of thing, November 3, 2010
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This review is from: King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone (Hardcover)
This might be the kind of thing you will like. The writers clearly had access to Steve S, and are being much more positive about him than any other source I have seen (I should say that while I do not know Schwartzman, I know many of the senior people of the pre-2004 Blackstone. While all of them did very well out of the business, none of them were fond of their fearless leader). The authors are also very positive about private equity in general, which makes the book read more like a puff piece than I would have liked. The actual contents are mostly a laundry list of deals, and some of the narrative is fairly insightful, while some just puts one to sleep (they did this, it did not work, they did this, it did work, etc, etc, etc).

To summarize: if you are very interested in the private equity business, by all means, read this book, otherwise I am not sure it will keep your attention.
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7 of 8 people found the following review helpful
3.0 out of 5 stars Read up on Schwarzman, January 12, 2013
For a while in 2006 it felt like private equity would buy up the universe. Intoxicated by rising pension allocations and a tidal wave of credit, PE companies acquired anything in their sight. The bonanza was crowned with the extravagant 60th birthday party of Blackstone's celebrity CEO Steve Schwarzman. Then came the hangover. Financial journalists David Carey and John Morris walk us through the making of Blackstone while at the same time giving the reader a history of the PE business.

In a way this is a story much like many others about successful entrepreneurs with initial struggles and self-doubt before the business takes off, quick expansion and then the inevitable need for outside management additions, structure and procedures as the business matures and gets scale. Schwarzman really is a gifted competitor. By focusing on risks and not overreaching when others are exuberant, by keeping reserves to opportunistically invest when others are terrified, by diversifying his firm into often counter cyclical product lines and by being impressively flexible to changes in the environment that PE operates in, he has over the long time won by not losing. One by one most of the competitors over-invested in good times and had to scale down to their ambitions. In the end only the arch enemy KKR with Henry Kravitz at the helm stood between Blackstone and the domination of the PE-sector.

One fascinating aspect of the two great PE booms (the LBO/corporate raider era of the late 80's and the period 2004 to mid-2007) that I - as a European - hadn't realized is how dependent they were on junk bond financing in the US. First there were Michael Milken's "original" junk bonds and in the later period there was an even larger flow of liquidity through CLOs - securitized loans pretty similar to those that flooded the US housing market with credits and nearly killed it. This correlation between varying credit conditions and volumes of PE-deals is probably the single most serious obstacle for the buying-low-and-selling-high-practice that PE-companies should engage in.

The authors are not only financial journalists; they both have backgrounds as writers for M&A- and PE-related magazines. Unfortunately this makes them slightly too impressed by the PE-business and the dominant characters of the trade. It's not that they can't see problems and two sides to a story but it's all too evident who's side they will take in the end. Another quarrel one could have with the text is that the authors present deal after deal (and they all but a few turn out roaring successes) but the reader still doesn't really get any deep insight into how Blackstone screens for prospects, analyze companies and structure the deals. Nor will the reader learn more of the management methods employed by Blackstone than fits on the backside cover of most corporate finance books. I realize Blackstone might not want to reveal too much but less quantity and more quality with regards to the description of Blackstone's deal history would have served the book well.

Eqtbooks.com rates books according to "knowledge content", any book like this that is semi-fiction will have a hard time to compete which is a bit unfair and Carey/Morris are good story tellers. However, I actually didn't learn that much new on the workings of private equity.

If you specifically want to read up on Steve Schwarzman and Blackstone this is the book for you. If you want an entertaining story of the larger than life happenings in private equity, Barbarians at the Gate is still unmatched.

This is a review by investingbythebooks.com
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3 of 3 people found the following review helpful
5.0 out of 5 stars Very Solid Book, March 19, 2011
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This review is from: King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone (Hardcover)
An exceptional book on Schwarzman and Blackstone. Yes, he's a billionaire and had a 60th birthday party that was over the top and defined the height of private equity. Yes, he had a running feud with Henry Kravis of KKR. But there is so much more about this great success story such as his background at Lehman as well as very unique relationship with founder Pete Peterson who currently spends great time and wealth drawing attention to the debt crisis in America.

If you have a background in finance this is a great book but it's written simply enough that non finance people would understand the concepts and greatly enjoy the read also. Is he a great American or just a wealthy guy who stepped on toes to make it to the top? You read the book and decide.
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5 of 6 people found the following review helpful
5.0 out of 5 stars King of Capital - Carey and Morris (Crown Business), January 12, 2011
This review is from: King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone (Hardcover)
The story of Blackstone is the story of the private equity business as a whole, at least in the telling of it from business writers David Carey and John Morris. Private equity, for those who might not be familiar, is a process whereby investment groups search for corporations that are somehow in trouble or, at a minimum, in need of greater efficiencies, invest in them thus taking them `private,' only to reorganize them into entities that can be put back on the market (or sold to another firm) at a considerable profit. Sometimes it works, sometimes it doesn't.

What makes Blackstone's story unique has as much to do with the personality of its chairman as it does with the rise of the firm itself. The authors portray CEO Steve Schwarzman, much as he is seen in the press; excessively driven, periodically hot headed and one who is known for his more-than-occasional outsized behavior (from having jet-skiing waiters serve him a beachfront lunch off of his yacht in St. Barth's to a lavish, pre-IPO birthday party that may have made his spotlight a little too hot with D.C. regulators.)

The rise of the firm is well documented, from its humble beginnings (where Schwarzman and his mentor Peter Peterson, both ex-Lehman execs, set up shop with just a secretary, two desks and a billion dollar dream) to its rise through the lists of competitive firms (Drexel, Wasserstein Perrella, Forstmann Little) arriving near the top and within spitting range of the leader of the pack, Kohlberg, Kravis and Roberts (KKR.)

Along the way, Carey and Morris outline every major deal the firm was engaged in (and some they were not - thanks to former Reagan cabinet member, staffer David Stockman) as well as the personnel in and outs that sometimes narrowed the staff down to near-desparate levels. The reader is given a conference room view of deal points, market factors and the all important banker relationships that are key to success or failure in the field, as well as a good look at Schwarzman's philosophy of always protecting the downside (Schwarzman is notorious for hating to lose money.) Part of the myth-busting applied by the authors surrounds the (ill-concieved, as they argue) notion that despite their `barbarians at the gate' style, strip and flip image, private equity firms, especially in the new world order (i.e. lower leverage opportunities post-regulation) can actually be beneficial to a firm's survival prospects (despite the standard downsizing) thus increasing the odds of a successful sale or IPO on the backside of the deal.

While "King of Capital" ostensibly purports to be the story of one firm - Blackstone - by the end, it becomes clear it really is about the two decade history of the private equity business in general, along with the argument that private equity often times helps a company rather than destroying it. If its focus had been another private equity firm (say KKR), the crux of the book would probably be very much the same. The rise of Blackstone, for all intents and purposes, parallels the path of private equity in general. That, as much as the machinations of the firm itself, is really the basis of this book.
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1 of 1 people found the following review helpful
3.0 out of 5 stars this is a reporter's view - it lacks the power of an insider's up close understanding of the facts, October 7, 2013
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This book is a fairly quick read that lays out the history of Blackstone and the origins of some of its spinoffs. Overall, I would say this book reads like a reporter's account of the facts of the situation. It does not have anywhere near the level of detail of an insider or someone that had intimate knowledge of the doings or workings of this firm. For that reason, i was a little disappointed with this book as it did not describe what has made this one of the great players in finance. Sure there is discussion of the leadership's obsessions with this or that and some color of the roles some of the senior players had in the direction of the firm, but I struggled to identify what was the critical element, other than the leadership's, or more specifically Schwartzman's, relentless pursuit of success that made this a great firm. It certainly appeared the author relied a great deal or was heavily influenced by Schwartzman's account and as such I was left wanting and believing as with so many other books written by reporters, not industry experts or insiders, that they lacked an understanding of the true dynamic within the organization. In the author's defense, there is a fair amount of criticism of the firm throughout the book. The most critical part revealed the culture of the firm which is described as a revolving door where talented individuals are not nurtured, but sooner or later get frustrated and trade away. Not too unusual on Wall Street, but the author describes this turnover as far more excessive than normal and given some of the talent that left, it is pretty hard to believe Blackstone has achieved all it has given some of these departures. Its a quick read that would be helpful to understand the firm if you are doing business with them, but this certainly would not qualify as a definitive account of this remarkable firm.
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1 of 1 people found the following review helpful
4.0 out of 5 stars Excellent Explanation, November 18, 2010
By 
Gerald Swimmer "manursing" (HIlton Head South Carolina) - See all my reviews
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This review is from: King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone (Hardcover)
The strength of this book is the clear explanation of how private equity works. Also I the last few chapters which describes the crisis in capital is illuminating. The first 150 pages of the book told the story of how Schwarzman and Peterson developed the business. They had a vision and were dogged in following through. Later in the book there were explanations of deals which becomes a little tiresome.

The main criticism I have with this effort is that I devoted substantial time to reading this and when it was done I did not feel that I understood Schwarzman. I realize that this was not intended to be a biography of him but I felt more insight would have been interesting.
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3 of 4 people found the following review helpful
5.0 out of 5 stars You can tell a book by its cover, January 8, 2011
By 
John E. Drury "jedrury" (Washington, DC United States) - See all my reviews
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This review is from: King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone (Hardcover)
Vibrant gold lettering set against the black and white of Grand Central Station catches the reader and brings a grand introduction to a well written, exhaustively researched and highly informative book by David Carey and John Morris. Though focused on Blackstone Group and its founders, Steve Schwarzman and Pete Peterson, private equity, its growth and importance in the America's financial architecture for the last twenty-five years is the book's centerpiece. The authors are well versed in the language of private equity and take the time to explain the lingo and structure of many of the deals, Blackstone's mother's milk. Especially interesting is the Celanese AG take over and how this American firm's ingenious risk taking and financial legerdemain avoided the staid German corporate laws and brought about its rebirth in America. Tony James' hiring as the new and needed CEO demonstrated Schwarzman's ability and flexibility to allow the stage to be shared by others for the good of the company and its partners. Blackstone's IPO and its telling fascinates as well. Avoiding the gushing of many business writers who focus on Wall Street's limousine lifestyle, Carey and Morris focus on the business of private equity by dissecting the many deals, and, by doing so, justifying private equity's importance in this country's fortunes and future.
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2 of 3 people found the following review helpful
4.0 out of 5 stars A chronicle of Blackstone and it's place in private equity, February 19, 2011
This review is from: King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone (Hardcover)
MY RATING SYSTEM:

* - if you have to chose between torture and reading this book, then you might want to consider reading the book - although it depends on just how severe the torture would be.

** - if you've lost your job and have quite a bit of free time on your hands, and don't have anything else better to do, then you might want to consider reading this book; don't expect to learn much or really be entertained. It will however, help you pass the time until your death.

*** - meh...I'm indifferent. Reading this book will not alter your life in any significant way, yet it is not so horrendously dreadful that your taking the time to read it will be a complete waste of time.

**** - Good book to great book zone here. You should probably read this book if you have some spare time. This book could be interesting, entertaining, or informative.

***** - Outstanding book! Make time to read this book - you'll learn or be entertained or intrigued. The book might even be good enough to provide original or helpful insights into the world that we live in.

REVIEW:

King of Capital tells the story of the founding and growth of the Blackstone Group, and does a very good job of setting up the context within which Blackstone was founded, laid its early foundations, and then grew to become one of the most important and influential firms in the financial world.

The book chronicles each of the phases in Blackstone's development through telling tales of key personnel, critical deals, and other important factors in play in the competitive environment. The book did a solid job of describing the evolution of private equity over the years of Blackstone's growth, which provides the reader that is less familiar with the private equity industry a decent grounding in the context and history in which Blackstone came to be.

What I found among the most interesting aspects of the book was that it brought to light many of the struggles that Schwartzman (and his co-founder partner Pete Peterson) faced when trying to complete their original fundraising, as well as how they handled many of the practical elements of running a private equity firm, including providing insight into profit sharing structures with partners, Blackstone's ownership of its various business groups, and the importance of steps such as formalizing an investment committee review process for evaluating prospective investments.

The authors also expend some effort in diving into discussions about the merit of private equity investments, including mounting defenses against many of the typical criticisms of the industry (e.g. that it destroys jobs and fails to create value beyond financial engineering). In this effort, they site research to support their position that private equity is, on balance, a positive force in the global economy.

If you are interested in finance and the private equity industry, this book will likely prove to be an interesting read. Those who have a limited or passing interest may find the at-times detailed discussions of deals and personnel tendencies to be a bit tiresome, but nonetheless, I found the book provided a good balance between specifics about Blackstone and general discussion about the industry.

Overall, I found the book to be an interesting and quick read (I made it through in about 4 or 5 sessions within a couple of weeks).
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King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone
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