During his 20-year tenure at Goldman Sachs, Harvey Schwartz was known as a strict and intimidating leader. After concluding that his colleagues were not qualified for the job, he reminded them that they were in the “big leagues,” and according to those who remember such conversations, the team had a poor record. There was no room for bad people.
That uncompromising style is now being put to the test in US buyout groups carlyle, appointed Schwartz as its new chief executive officer this week. He’s at the helm of a company battling an identity crisis after a protracted turmoil that left it far behind its competitors.
“He is a demanding boss and expects high performance and a real commitment to his work.” Schwartz at Goldman. Another described Schwartz as a “street fighter” who was quick to sideline or cut off what he judged.
Schwartz must decide what Carlyle’s strengths are after years of lackluster performance and management woes. He resigned after losing a nasty power struggle with a David Rubenstein and William Conway.
The long road to finding a replacement for Lee has been full of twists and turns. Over the past six months, Carlyle reached out to several Wall Street executives before deciding on Schwartz on Sunday, days before its fourth-quarter earnings announcement.
These results reveal the damage done by a long leaderless stretch: Carlyle raised $4.9 billion in new funding for its fund, just a fraction of what its rivals have drawn. department.
Schwartz brings significant Wall Street experience to the job — he left Goldman Sachs after losing a contest to be chief executive — but those close to Carlyle say he’s been in private equity. He admits that his job is complicated by his relative lack of experience in
“Understanding Carlyle’s strengths and opportunities is critically important for Harvey, especially compared to its peers,” said Michael Brown, an analyst at Keefe, Brouillette & Woods.
Many of Mr. Schwartz’s former colleagues argue that Mr. Schwartz is up to the task, with a common trait stemming from a background that seems smart and ruthless but appears unsophisticated compared to other Wall Street executives. I am sketching a picture of an operator with touch. Almost before graduating from college, he eventually enrolled at Rutgers University in New Jersey, graduating with an agreement in economics before earning his MBA at Columbia University.
Schwartz joined Goldman in 1997 to join the sales and trading team for gold spinning commodities. He has made an extraordinary rise at a prestigious investment bank, transitioning from sales to co-head of a vaunted trading business to chief executive officer.
During the 2008 financial crisis, he led Goldman’s Juggernaut Trading division through market upheaval. He was then promoted to Chief Financial Officer, and Lloyd considered him a candidate to lead the company following Blankfein’s retirement.
“Mr. Harvey is a meticulous and hands-on risk manager,” Mr. Blankfein told the Financial Times. “He looks around the corner and anticipates what could go wrong. As CFO, he has built great relationships with shareholders, regulators and company risk takers.”
After four years as Chief Financial Officer, Schwartz was promoted to Goldman Co-President alongside David Solomon in 2017, positioning the two as potential successors to Blankfein. Blankfein would choose Solomon for the position in his 2018, and Schwartz retired at his 58th birthday. Since then, Schwartz harbored hopes of becoming chief executive, according to people who knew him.
Despite his unrelenting style, colleagues say he didn’t seek conflict because of it. It wasn’t,” said Pablo Salameh, who co-headed Goldman’s trading operations with Schwartz and is now co-Chief Investment Officer at Citadel. Salameh added that it was relatively rare “in places like Goldman where charging is tough.”
Carlisle has been plagued by this kind of politics for years.The department’s co-heads ended up fighting each other in bitter turf wars. It was a clash after Youngkin was named co-CEO. Lee won that round in 2020, and Youngkin successfully campaigned to become a Republican Senator from Virginia after retiring.
However, Lee’s victory was short-lived. He won the trust of shareholders during his nearly two-year extension as sole CEO. He quickly expanded into credit and insurance-based investments while trimming the inefficiencies of low-margin businesses. But the pace of change proved internally controversial, and he couldn’t keep the company’s founder aside.
For Schwartz to succeed, he must win the support of the founders who verbally give him full autonomy but who continue to wield great influence as co-chairs and large shareholders. In a call with the fund’s investors on Wednesday, Conway promised to give the new chief executive the space he needs to plan a new strategy, according to people briefed on his remarks.
People close to the company say Mr. Schwartz will have to make decisions between businesses he believes can grow and businesses he needs to dump or shrink.
Carlyle’s credit investment business grew rapidly under Mark Jenkins, whom Lee brought to Carlyle during his turn round efforts. The pace of growth in the company’s infrastructure and “investment solutions” businesses has slowed, prompting some to question whether it should be sold in the future. Schwartz is also tasked with further streamlining Carlyle’s costly and inefficient back his office to maximize profits.
He will also have to win the endorsement of two of the lost internal CEO candidates: Peter Clare, chief investment officer of Carlyle’s private equity operations, and Jenkins, the company’s head of credit. I have. Complicating matters is Claire’s role as a director. But Clare and Jenkins pledged to investors on Wednesday’s conference call to back Schwartz, according to people who heard the remarks.
One source of firepower is billions of dollars of cash on Carlyle’s balance sheet. Conway indicated this week that Schwartz could be used for acquisitions that could bring the company’s fortunes back to life more quickly.
If Mr. Schwartz succeeds, he could make a lot of money. If he can push his stock price past the bar, or if his company is sold to a competitor, it could go up to $180 million over the next five years.
“That’s a big number,” said Brown, an analyst at Keef, Brouillette & Woods, of the compensation arrangement.