For Cerberus chief, private means private
NEW YORK — Stephen Feinberg might not be a household name — yet. But with his startling acquisition of Chrysler, announced Monday, the founder of Cerberus Capital Management is arguably a more important figure in the auto world today than Bill Ford, heir to the legendary Henry Ford.
Feinberg’s deal, through which he plans to acquire 80 percent of Chrysler from the company’s German parent, DaimlerChrysler, for $7.4 billion, means that for the first time in half a century, one of the Big Three U.S. automotive manufacturers will be private, not publicly traded.
And where Feinberg is concerned, private means private.
The 47-year-old Princeton graduate, who started his distressed-bond investment firm in 1992 with a stake of $10 million, now has $25 billion under management and investments in 50 companies, including Air Canada, Alamo and National Rent a Car.
But he remains an elusive figure among Manhattan’s hedge fund/private equity titans.
Competitors such as Kohlberg Kravis Roberts’ Henry Kravis, who led the leveraged buyout of RJR Nabisco in 1989, and Stephen Schwarzman of the Blackstone Group are fixtures on New York’s social circuit.
Feinberg, who lives with his wife and three daughters in an apartment on the Upper East Side of Manhattan, avoids the spotlight. Instead, he spends most of his time at his office, crunching numbers and looking at deals.
“You don’t see him lighting up the Rockefeller Center Christmas tree or throwing fancy parties for himself,” says Timothy Price, a former MCI executive who’s a managing director at Cerberus. “He’s a modest guy.”
He may be modest on a personal level, but as a businessman and investor, he’s proven to be aggressive and tenacious.
In Greek mythology, Cerberus is the three-headed hound that guards the entrance to Hades. But in the early 1990s, Cerberus was more like a junkyard dog, buying the debt of troubled companies, taking control and improving their operations.
As Cerberus grew and became more interested in larger companies, Feinberg hired prominent public figures — including former vice president Dan Quayle and former Canadian prime minister Brian Mulroney — to put the hell hound image behind him.
Last year, Feinberg succeeded in buying control of GMAC, the finance arm of General Motors. With the help of Cerberus Chairman John Snow, former Treasury secretary under President Bush, he has now engineered the Chrysler deal.
Feinberg’s transformation from junk bond dealer at Drexel Burnham Lambert and Gruntal & Co. to automotive titan is amazing, says Jeffrey Sonnenfeld of the Yale School of Management and co-author of “Firing Back,” a book about CEOs.
“Feinberg is incredibly impressive,” Sonnenfeld says. “How he uses marquee, door-opener names like John Snow and Dan Quayle shows he’s not out there for the limelight himself. It’s an enormous triumph.”