By Heidi N. MooreMany senior bankers have left big Wall Street firms this year. Yet, among the big names rushing hither and yon, here is name that sticks out: Goldman Sachs Group’s Chicago banker Byron Trott–Warren Buffett’s most beloved banker and onetime heir apparent to Hank Paulson–is leaving to start his own firm.
Trott is the latest veteran investment banker to leave such big firms as Goldman Sachs, Morgan Stanley and Bank of America Merrill Lynch, among others. But while most have been scarfed up by rivals or have gone the boutique route, Trott will start a merchant-banking firm that will include a $2 billion fund to invest in family-controlled and entrepreneurial companies and advise them, according to our deals czar, Dennis K. Berman.
It’s hardly a blow to Buffett, who will maintain both his relationships with Trott and with Goldman Sachs. Buffett told WSJ colleague Scott Patterson that “a few months ago, he said, he met with an individual at the bank who will ‘take care of me’ after Mr. Trott departs.”
Buffett, who invested $5 billion into Sachs at Trott’s suggestion, will invest money in Trott’s new venture as well. “We’ll have a modest partnership interest,” Mr. Buffett said in an interview with Patterson, although he noted, “We will not be the big dog.” As to the other investors, “Most of them will be from a group of family companies that in one way or another he’s been close to,” Buffett said.
Trott’s focus on family-owned companies harks back to his early days in investment banking, when he advised high-net-worth individuals in the Midwest as part of Goldman’s wealth-management group. Very often, those investors were CEOs of small companies as well, which brought Trott to the attention of Goldman’s investment bankers in Chicago–including Hank Paulson, who then headed the Chicago office and boosted Trott’s career.
To many on Wall Street, Trott’s departure isn’t a shock. Rumors abounded at least once a year for the past six years that Trott would strike out on his own, each time debunked, only to be resurrected the next year. The rumor that Trott would join–or even succeed–Buffett also was persistent.
The last week has brought even more departures of senior bankers, a trend that started to take shape earlier this year. This week, Merrill Lynch European energy banker Jonathan Grundy joined Credit Suisse, while Morgan Stanley banker Maurice Marchesini — who advises Midwestern banks — joined UBS along with former Banc of America veteran Sean Minnihan, who advises financial technology firms.Related Links
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