Word: hutton
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Lured by the seemingly inexhaustible demand for junk-bond financing, Drexel's Wall Street rivals rushed into the profitable business. The newcomers included such prominent firms as Goldman Sachs, First Boston, Merrill Lynch and Shearson Lehman Hutton. While Drexel's grip on the market gradually slipped, in 1985 it controlled more than half of the new issues. "Drexel is like a god," Michael Boylan, president of the publishing firm Macfadden Holdings, declared in a magazine article that a Drexel executive proudly framed. "They are awesome. You hate to do business against them...
Drexel's outcast employees have company in their misery. The firm's crack-up comes amid a flurry of reversals for the highflyers who symbolized the boom time. Last month Peter Cohen stepped down as chairman of Shearson Lehman Hutton, the firm he had built into a Wall Street giant that ranked second only to Merrill Lynch. Like so much that flourished during the hothouse decade, Shearson simply grew too fast. Beset by falling revenues, failing deals and internal disputes, Cohen was forced out by James Robinson III, the chairman of American Express, Shearson's parent company...
...book contends that KKR won, reaping $75 million in fees alone, partly because its opponents were bumbling latecomers to the world of leveraged buy- outs. Johnson's Wall Street advisers, who included the giant firms Shearson Lehman Hutton and Salomon Brothers, sometimes carried on like the Keystone Kops. At one point, lawyers carrying a Johnson offer became stuck in Manhattan traffic moments before the bid was due. In desperation, they leaped from their cab and raced the remaining two blocks on foot, arriving breathless and embarrassingly late. Said a disgusted RJR director: "This is the gang that couldn't shoot...
...embodied Wall Street's gold-rush spirit of the 1980s more than Peter Cohen, the high-strung chairman of the investment firm Shearson Lehman Hutton. A short, cigar-smoking firebrand, Cohen transformed Shearson from a stolid retail brokerage into an investment-banking giant. Backed by American Express, which bought the firm for $360 million in 1981, Shearson grew from 11,000 employees to 47,000 by the mid-'80s. But Cohen's expansion drive proved unstable. Hurt by several missteps and the slowing pace of Wall Street dealmaking, Shearson's investment-banking revenue declined 27% last year, to $963 million...
...orchestrated a $360 million merger between Shearson/American Express and Lehman Brothers Kuhn Loeb. That move catapulted Shearson into the immensely profitable investment-banking business. But signs of stress began to appear in the wake of the 1987 stock-market crash, when Shearson paid nearly $1 billion to acquire E.F. Hutton. Dozens of top-notch Hutton brokers defected to other investment firms. At the same time, the firm suffered dwindling business from individual investors, on whom Shearson was still heavily dependent. Cohen, meanwhile, who had begun acting the part of the jet-setting dealmaker, was paying less attention...