On a chilly afternoon in February 2005, Stephen Murray entered the Park Avenue headquarters of JPMorgan Chase & Co. and rode the elevator that would take him to the 48th floor and the office of the banks then president, Jamie Dimon. The famously candid Dimon had joined the bank the previous summer, after the institution he ran, Bank One Corp., merged with JPMorgan, and Murray, head of buyout and growth equity investments at J.P. Morgan Partners, the banks private equity group, wanted to get his new bosss take on business.
For months, Murray, Dimon, JPMorgan CIO Ina Drew, the firms famous deal maker James (Jimmy) Lee Jr. and J.P. Morgan Partners longtime CEO, Jeffrey Walker, had been hammering out the details of a deal that would spin out the private equity group after more than two decades within the walls of the bank and its predecessor firms. Murray, then 42, was getting the chance to become a partner in the new enterprise.
It was the opportunity of a lifetime, but Murray, who had struck deals with CEOs twice his age when he was in his 20s, had some concerns. He worried about the surging leveraged-buyout market, which he felt was being fueled by low interest rates and easy access to credit. Although few others in the business appeared to give a second thought to the then-record $300 billion worth of buyout transactions that had taken place in 2004 or to the growing size of private equity funds that were being raised as investors rushed to get a piece of what seemed to be easy profits, Murray saw the numbers as alarming.
A fast-talking workaholic who spurns the spotlight as often as his rivals seek it out, Murray had spent the previous year evangelizing to his staff and other investors that private equitys future would soon lie in operational turnarounds generating profits from revamped companies rather than financial wizardry. It was an approach JPMorgans group had long followed, but Murray felt he was missing critical expertise at the top to add to the tight-knit group of deal makers on whom he relied. Murray planned to hire hands-on operators ideally former CEOs as full partners in the firm. The executives would be paired with a financial partner to help identify investments and turn around businesses in what he confidently believed would be a brave new world, even as competitors were going in the opposite direction.
In their meeting that February afternoon, Dimon thought Murrays strategy of doubling down on operations was a good one. But he sounded a note of caution about the enthusiastic executives ability to get it done. There are few corporate CEOs who are both great operators and great investors, Dimon remembers telling Murray. First, youre looking at the top echelon of CEOs, says Dimon, who became chief executive of JPMorgan in January 2006. But then you need someone who thinks like an investor. Youre shooting at a very small target.
Dimon was right, but he underestimated Murrays patience, discipline and willingness to go against the herd.
In 2006 the bank spun off the buyout and growth equity team of its private equity group into a new firm called CCMP Capital Advisors. But it wasnt until August 2008, after Walker retired, that Murray finally brought in the first of three new operations partners: Greg Brenneman, a sought-after leader who had turned around everything from Continental Airlines to restaurant chains Burger King Corp. and Quiznos. Murray also made the now 49-year-old Brenneman chairman of CCMP.
When asked what differentiates Murray from other private equity kingpins, Dimon fires back that Brennemans hiring illustrates Murrays discipline and leadership abilities. Murray was able to set aside his own ego the same characteristic that kept him out of the fray at the height of the market to bring on board an extremely charismatic leader as a working chairman who would act almost as a co-CEO. Look, he was able to attract someone like Greg Brenneman to come join him, Dimon says. Then he made him chairman. Thats a hard thing for a CEO to do.
After Brenneman joined CCMP, it took Murray a year before he enlisted another CEO, Richard Zannino, former chief executive of Dow Jones & Co. Zannino, now 52, had transformed Dow Jones into a diversified media company through $2.5 billion in acquisitions and restructurings, capturing the attention of Rupert Murdochs News Corp., which bought it in December 2007. In September 2009, Murray recruited energy industry veteran Karl Kurz. Although Kurz was not a former CEO, he had played a key role in the global expansion of Anadarko Petroleum Corp. as that companys chief operating officer.