Could Personal Connections between Blackstone and Carlyle Serve to Forge Buyout Deals?

(NewsVisual, powered by IntellectSpace) -- The New York Times DealBook reported on Tuesday the conference in Munich, Germany of the world’s leading private equity firms that the firms will see more modest deals in the near future, such as “far more equity deals with minority stakes” and “far fewer, if any, leveraged buyouts.”

Yet it’s also possible that the firms could join forces or capital with one another to initiate major buyouts.

NewsVisual created an IntellectSpace Knowledge Map that demonstrates a plethora of potential deal-making connections between firms that the Times article excludes from consideration (see the DealBook article by Rhea Wessel ).

Blackstone’s Chairman Schwarzman’s Comments Attract Bad Buzz

(NewsVisual, powered by IntellectSpace) -- When it comes down to a taking a vote on the most obtuse comment ever uttered by a rich person, the public could find it difficult to choose between that made by the late Leona Helmsley or the recent one made in The New Yorker magazine by Blackstone Group Chairman and Co-Founder Stephen A Schwarzman. 

Although his stake in Blackstone is estimated to be worth billions, The New York Times reported on Monday that Schwarzman said in the magazine interview that “I don’t feel like a wealthy person”  (read the New York Times Deal Book article).

In response to the magazine article, Schwarzman told the Times he was being unfairly caricatured in the article. 

NewsVisual created an IntellectSpace Knowledge Map of Schwarzman’s noteworthy past and present leadership ties in order to achieve some greater insight into this famed executive’s corporate network.

This Knowledge Map shows Schwarzman to have a large degree of executive leadership experience through his positions at Blackstone and Lehman Brothers.  The Map also shows that Schwarzman has held numerous directorships at companies that include Ucar International, Volume Services, Transtar and Collins & Aikman. He is also a member of the JPMorgan Chase National Advisory Board.

Blackstone Chairman Stephen Schwarzman Takes on Private Equity Challenge with Noteworthy Connections

Blackstone Group Chairman and Co-Founder Stephen A Schwarzman made an appearance on Monday at the CBI conference to defend private equity in its current shaky state. Despite his optimism, Scwarzman’s speech was met with mixed reviews, with half the audience left unconvinced that private equity was the shining force that it was made out to be according to the Blackstone head (see article from Management Today).

Being such a huge force in private equity makes Stephen Schwarzman quite the figure of interest amidst this industry turmoil. NewsVisual created an IntellectSpace Knowledge Map of Schwarzman’s notable past and present leadership ties in order to achieve some greater insight into this famed executive’s corporate network (Note: the information contained and presented in Knowledge Maps is public information from the Securities and Exchange Commission of the United States of America).

This Knowledge Map gives a clear idea of how well connected Schwarzman truly is. Not only is he shown to have a large degree of executive leadership experience through his positions at Blackstone and Lehman Brothers, Schwarzman has also held numerous directorships at companies that include Ucar International, Volume Services, Transtar and Collins & Aikman. He is also a member of the JPMorgan Chase National Advisory Board.

Does Board Experience at Blackstone Add Weight to Its President’s Comments?

While The Blackstone Group announced its own third-quarter losses on Monday, the world’s largest private-equity firm’s President and COO, Hamilton James, voiced the ominous assessment that financial institutions are still baffled by the exact magnitude of their own losses as a result of the subprime debacle (read the Reuters article by Michael Flaherty and Megan Davis).   

Although overall revenues increased to $526 million from $461.5 million in the same period last year, a substantial portion of the company’s losses were from $802 million in non-cash charges relating to IPO unit awards and the amortization of intangibles, a company press release stated. 

NewsVisual created an IntellectSpace Knowledge Map to determine the level of experience among the company’s Board of Directors. 

Council on Foreign Relations Plays Key Role in Proctor & Gamble – Blackstone Deal

Does The Council on Foreign Relations play a significant role in the business world? It does if you are the Blackstone Group. Blackstone was retained by Proctor & Gamble Co to serve as an advisor on the possible sale of its Duracell batteries, Pringles snack chips, and Folgers and Millstone coffee brands (see article in The Wall Street Journal). We created an IntellectSpace Knowledge Map to determine if any ties could have played a role in this deal and were surprised by the strong ties through The Council on Foreign Relations.

Blackstone's Connections Lead to Dominant Position in Private Equity

Blackstone Group seized a record today, announcing that it closed its most recent buyout fund at an impressive $21.7 billion. DealBook noted that much of the fund’s wealth had already been reserved for such deals like Biomet, Freescale Semiconductor, and Hilton Hotels (see article from DealBook). In an effort to discover how relationships may have played a role in Blackstone’s success, we decided to map Blackstone’s connections to these three companies.

As displayed in these IntellectSpace Knowledge Maps, Blackstone has numerous links to the companies they are acquiring. Taking a look at the Knowledge Map connecting Blackstone to Biomet, we found Matthew Kabaker (a Principal at Blackstone) can be linked to Adrian M. Jones (a Director at Biomet) through HealthMarkets, where they both serve together on the board of directors. This relationship may have given Blackstone the advantage in purchasing Biomet.

In this next Knowledge Map, we see Blackstone’s ties to Freescale. The connections between the companies are extensive, so it’s not surprising that Blackstone was able to beat out other competing buyout firms for this deal. A specific relationship that may have proved helpful at the time of this acquisition is shared between David McVeigh (an Executive Director at Blackstone) and Stephen P. Kaufman, who was Lead Director of Freescale at the time of the purchase; they both served as Partners at McKinsey. This relationship alone likely created a valuable connection to support Blackstone’s interest in a buyout.

With the case of Blackstone’s takeover of Hilton Hotels, we revisit the Knowledge Map we published on July 4, 2007 (see article). John L. Notter (a Hilton board member) and Hamilton James (Vice-Chairman of Blackstone) served together on the board of Credit Suisse First Boston, which could have possibly generated deal discussions.  Stephen F. Bollenbach (Hilton Hotel’s co-Chairman and CEO) and Hamilton “Tony” James (Blackstone’s imminent leader) both sit on boards with James B. Adamson; Bollenbach shares a seat with Adamson at K-Mart and James shares a seat with Adamson at FCI, where Adamson serves as Chairman.

Click here for an interactive version of eseIntellectSpace Knowledge Maps (Internet Explorer browsers only):

Blackstone and Biomet: http://nv.intellectspace.com/ispace/GuestMonitor.aspx?id=d56ded47-dad8-4515-ab85-8fc7965697f0

Blackstone and Freescale: http://nv.intellectspace.com/ispace/GuestMonitor.aspx?id=4026cec8-8eae-4ddd-a9ff-1adb889d3363

Blackstone and Hilton: http://nv.intellectspace.com/ispace/GuestMonitor.aspx?id=6dc8bcc6-61a3-493c-be9d-9fa8ea9d6005

Notter and James: http://nv.intellectspace.com/ispace/GuestMonitor.aspx?id=2647706e-d839-45dc-bef8-2f508ff6e202

Bollenbach and James: http://nv.intellectspace.com/ispace/GuestMonitor.aspx?id=167b5e8d-be4e-40e5-8984-87a8180ded1d

Visual Map: Blackstone Acquisition of Hilton Hotels

Senior leadership likely led the merger discussions of Private Equity giant Blackstone and Hilton Hotels - the largest hotel group in the world by number of rooms.  After running several Common Connection analyses with IntellectSpace FN ( www.intellectspace.com), it became clear that it couldn't have been difficult to get the two of these leadership teams in a serious merger discussion.

Below is the first Knowledge Map in our analysis - visually mapping the common connections between the two firms:

http://nv.intellectspace.com/ispace/GuestMonitor.aspx?id=6dc8bcc6-61a3-493c-be9d-9fa8ea9d6005

Viewing the Knowledge Map quickly shows that John Notter (Hilton Hotel's Board Member) and Hamilton James (Vice-Chairman of Blackstone) shared board seats at Credit Suise First Boston, and could have helped to spur discussions.  To take a closer look at their connection with one another, we created another Knowledge Map to identify all of the connections of these two individuals:

http://nv.intellectspace.com/ispace/GuestMonitor.aspx?id=2647706e-d839-45dc-bef8-2f508ff6e202

Having a feeling that Hamilton James (the imminent leader of Blackstone) was intimately involved in these discussions, we then mapped his common connections with Hilton Hotel's CEO and Co-Chairman - Stephen Bollenbach. 

Below is the IntellectSpace Knowledge Map that visually maps the common connections between these two powerful individuals:

http://nv.intellectspace.com/ispace/GuestMonitor.aspx?id=167b5e8d-be4e-40e5-8984-87a8180ded1d

Viewing this Knowledge Map shows that Bollenbach and James both share board seats with Flagstar Companies Inc / FCI Chairman - James Adamson; Bollenbach sits on K-Mart's board with Adamson and James sits on FCI's Board with Adamson.  Adamson could have played a key role in bringing these powerhouses together.

Just another example of how relationships drive deal flow.

Map of Blackstone's Far-Reaching Ties into Alliance Data

Both Stephen A Schwarzman and Peter G Peterson are directly related to the biggest individual investors of Alliance Data through Centennial Cellular, according to an automatically generated IntellectSpace Knowledge Map that illustrates common connections between Alliance Data and Blackstone using a unique visual presentation.

This Knowledge Map offers interesting insights into the behind-the-scenes deal-making as it delineates decision-makers and how they are related. 

More specifically, Knowledge Map shows both Steven Schwarzman, Chairman of Blackstone and Peter G Peterson to be connected to Centennial Cellular in an ownership capacity (green line).  Centennial Cellular is connected to 14 individuals through ownership, including Anthony Denicola and Thomas McInerney, who are also investors of Alliance Data.  The Knowledge Map depicts investment relationships with green lines, board positions with blue lines, and executive positions with red colored lines. 

This Knowledge Map is also available in an interactive version by navigating to the following URL (Internet Explorer viewers only): http://nv.intellectspace.com/ispace/GuestMonitor.aspx?id=57925ce2-3731-4cd7-8ee4-d4af53313d86

Mapping Goldman’s and Blackstone’s Relationships

Here is an interesting Knowledge Map that shows how inter-connected Goldman Sachs and Blackstone executives truly are.  An even more interesting observation, however, is that most of the common connections between these two entities are former connections.

http://nv.intellectspace.com/ispace/GuestMonitor.aspx?id=ae0e7e8a-cc79-47d7-a7ff-405d93421602

(INTERACTIVE VERSION)

Goldman and Blackstone have even less common board positions, as the following Knowledge Map suggest:

http://nv.intellectspace.com/ispace/GuestMonitor.aspx?id=b13ff193-556b-438a-9c30-ba86ac9f6675(INTERACTIVE VERSION)