Guy Hands was already a star at Goldman Sachs when in 1994 he
approached the new CEO, Jon Corzine, to pitch his plan to buy
and turn around a string of faltering English pubs.
Corzine said no. Hands jumped ship to Nomura Securities,
where over the next decade his team acquired 15 businesses with
an aggregate enterprise value of some $27 billion. But the
English pub turnaround would remain his favorite project: Hands
acquired a wide array of tied pubs, named as such
because they were bound to particular breweries and forced to
buy beer at a substantial markup. Handss team worked with
government regulators to free the pubs from the antiquated
system and force the breweries to compete for sales.
These days its tough to find an old buyout pro
whos more bullish on the future of the European private
equity industry than Hands, 52. Last month he told an audience
at Harvard Business School that the economic perils facing
Europe mean that many businesses will soon be on the auction
block and that private equity will be there to snatch
them up at bargain prices. Governments will start selling
assets across Europe much like Thatcher did in the 1980s,
he said. Private equity will have huge
Hands, who calls himself the father of securitization, said
ailing businesses in the euro zone will need new strategies
from buyout teams looking for value over a decadelong horizon.
What those businesses dont need, he said, are CEOs
continuing to obsess over quarterly numbers. Then the chairman
and CIO of London-based private equity shop Terra Firma, a
Nomura spin-off, took a swipe at the hedge fund industry.
If you are looking for a career just focusing on
making money, then please dont come into the private
equity industry, he cautioned HBS students. If just
making money is what motivates you, then focus instead on the
banking industry or the hedge fund industry. Leave private
equity and the creation of long-term value to those of us who
love making businesses better.