Dealmakers Can’t Resist Lure of a Good Idea
By KATE BERRY
Staff Reporter
After you’ve made your first billion or for that matter $500 million what other deals are left to do?
If you have to ask, you’re probably not in the club. In Los Angeles, home to a sizable number of super-wealthy investors like John Anderson, the answer inevitably has less to do with the money than the deal and with it, compulsion, vanity and perhaps a shade of fear.
Whatever the reason, L.A.’s very wealthy have assembled a built-in support system of entrepreneurs, bankers and other businessmen who encourage the deals to keep coming.
“People with a business proposition who don’t have the capital run to guys like Eli (Broad), Ron (Burkle) and (John) Anderson, and they try to sell them a good idea,” said Alan Rothenberg, a lawyer and major dealmaker himself.
Rothenberg recently opened 1st Century Bank in Century City, drawing investments from Edward Roski Jr., chairman of Majestic Realty Co.; Robert Margolis, chairman of Cherokee Inc., Richard S. Ziman, Chairman of Arden Realty Group; and actor Mel Brooks.
Some say dealmakers can be divided into two groups: those who are creative, and those who know how to recognize creativity in others.
Roski, who built Staples Center with Denver-based billionaire Philip Anschutz, is described as a “deal junkie,” known for working from 7 a.m. to 1 a.m. and his sponge-like absorption of everything he reads.
“More than being an operator of a business, these are people who get a high and a thrill out of doing a deal, and buying or selling a business,” said Rothenberg.
Roski, whose net worth was estimated by the Business Journal last year to be $942 million, built his fortune in the complex world of public-private developments, and is the dominant figure behind the build-out of City of Industry. Besides investing in Staples Center and Rothenberg’s bank, he also owns the Silverton Hotel & Casino in Las Vegas.
‘Taking opportunities’
John Anderson draws on the creativity of others, then fits their ideas into an almost formulaic financial structure.
“I have not been a guy that is out looking for deals,” said Anderson, 86, the founder of Topa Equities Ltd., a privately held Century City conglomerate that operates beer distributors, insurance groups and car dealerships. “I own 42 companies today and most of my deals have come by taking opportunities that have been presented to me.”
In 1984, Richard Kayne, an executive from bond firm Cantor Fitzgerald, met with Anderson because he needed between $60 million and $70 million to start his own money management firm.
Anderson knew little about running a bond firm, but he gave Kayne the money to start what is now Kayne Anderson Rudnick Investment Management, which currently has close to $12 billion under management.
“A lot of extraordinarily successful people have difficulty relinquishing control,” said Kayne. “Anderson has the ability to trust people and more often than not, his judgment about the character of people has been accurate.”
Many of L.A.’s richest dealmakers started in one line of work and segued into another. Along they way, they typically put together a trusted group of advisors or executives. This group typically includes a lieutenant in operations, a key banker and lawyers.
Anschutz has Tim Leiweke, president of Anschutz Entertainment Group Inc., which owns Staples Center. Eli Broad has Jay Wintrob, president of SunAmerica Inc., who started 15 years ago as an assistant to Broad. Both men are dealmakers in their own right.
Once a multi-billion dollar business is established, opportunity and status flows in one direction: toward those who already are making money.
Easier access
Unlike New York, with its assemblage of Fortune 500 companies and major investment banks, dealmakers here move in a smaller, more entrepreneurial group. The local investment banking community is a captive audience, giving the heavy hitters the first crack at the best deals.
“I think generally guys like John Anderson get special or proprietary deal flow because of their stature and reputation,” said Jim Freedman, managing director of investment banking firm Barrington Associates, who sits with Anderson on the Board of Visitors at the Anderson School at UCLA.
Despite the money and prestige, most elites enjoy rolling up their sleeves and diving into the numbers of a deal. “Deal making is very creative and you don’t have to go home and paint,” said Lew Wolff, co-founder of Maritz, Wolff & Co., the private investment fund that owns stakes in 50 luxury hotels. “It’s as much art as it is business.”
Ron Tutor, president and founder of Tutor-Saliba Corp., the construction contractor in Sylmar, said his motivation to make money originated from the construction business itself, which is capital intensive.
“You can’t bid on the larger jobs until you have more capital,” said Tutor, who landed on last year’s Business Journal list of Richest Angelenos, with an estimated net worth of $427 million. “People always say: If you make a certain amount of money, why don’t you quit? But you have to get to a certain point of money until you feel secure.”
When pressed for a dollar amount that would provide enough safety to stop investing, Tutor admitted that for him, there might not be such a number.
“It’s really about the deal, the transaction, the potential for success it’s the challenge,” he said. “It’s that need of constantly challenging yourself that is what really makes you feel good about things.”
