By Dan Primack
September 28, 2010

Last night I finished up “King of Capital,” a new book on The Blackstone Group by David Carry and John E. Morris (available next week). Kind of reads like a broad history of private equity, with Blackstone as the touchstone.

Pretty sympathetic toward the firm — and toward PE in general — although Steve Schwarzman takes some minor hits for his tin ear and quick temper. Oh, and David Stockman gets savaged.

Here are some pull-outs:

* The book suggests that Blackstone’s break-up with Larry Fink was partially caused by Schwarzman’s ongoing divorce negotiations. Basically, Fink wanted more economics for his group (now Blackrock) than Schwarzman thought he was entitled to receive.

* When Clayton Dubilier & Rice met with IBM chairman John Akers about the deal that would become Lexmark, Akers held up a copy of “Barbarians at the Gate,” and said: “The reason I am talking with you is because you are not mentioned in this book.”

* Bret Pearlman, on how Charter Communications overpaid for Blackstone’s cable industry companies: “We used to get up every morning and thank Paul Allen. Hallelujah!”

* Before hiring Tony James as firm president, Blackstone offered the job to Jimmy Lee.

* From an investment standpoint, James insisted that deal teams look at extreme best-case and worst-case scenarios. Schwarzman called them “tooth fairy scenarios.”

* When KKR went public in Amsterdam, more than a dozen U.S.-based PE firms readied similar offerings. Blackstone’s was code-named Project Panther.

* Blackstone’s deal for Equity Office was actually its third bite at the apple. Its original attempt included CalPERS as a co-investment partner.

* There is a lot about the birthday party. Oddly, no quotes from Schwarzman on the debacle (even though he was interviewed repeatedly for the book).

* Pete Peterson was not initially in favor of the IPO. By then, however, Peterson didn’t really much matter at Blackstone.

* Schwarzman didn’t pose for that infamous Fortune magazine cover. It was a stock photo, and used without his knowledge. As for the WSJ article with the $400 stone crabs, the interviews had happened months earlier, and Blackstone mistakenly thought the story had been killed.

* Tony James fell ill with kidney stones while pitching the IPO in Kuwait. He went to the pitch meetings anyway.

* The book talks a bit about the Hertz buyout, and tries to debunk the idea that it was a “quick flip.” To do so, it points out that the company’s revenue soared after being acquired by Carlyle, CD&R and Merrill Lynch. What it fails to note, however, is that much of that revenue ramp came courtesy of Hurricane Katrina, which necessitated an unprecedented amount of heavy equipment rentals.

You May Like