It was over sushi in Midtown Manhattan that Blair W. Effron and Robert A. Pruzan, two longtime Wall Street deal makers, began devising plans for a new investment bank.
The timing seemed perfect. This was in 2006, and the mergers-and-acquisitions business was on fire. Mr. Effron, a managing director at UBS, and Mr. Pruzan, a protégé of Bruce Wasserstein, had decided to strike out on their own.
No sooner did they open their little firm, Centerview Partners, than the merger boom went bust.
But the firm has not suffered like many of its king-size rivals. In fact, it has thrived, becoming one of the few standout successes in these turbulent times on Wall Street. If there is a boutique firm that Fortune 500 chief executives are whispering about, it is Centerview.
With a list of blue-chip clients including Altria, H. J. Heinz, the News Corporation and PepsiCo, Centerview Partners has worked on some of the biggest deals of late, outranking even Greenhill & Company, the model for Mr. Effron’s and Mr. Pruzan’s firm.
And Centerview has added some sought-after talent since those sushi dinners two years ago. Stephen S. Crawford, a former co-president of Morgan Stanley, joined the firm as a founding partner, as has Adam D. Chinn, a lawyer at Wachtell, Lipton, Rosen & Katz. But perhaps Centerview’s biggest catch has been James M. Kilts, a former chief executive of Gillette and Nabisco, who signed on to run the firm’s fledging private equity fund.
“They’re not like bankers,” remarked Indra K. Nooyi, the chief executive of PepsiCo, in a flattering reference. She talks constantly to Mr. Effron, whom she has known for years, seeking his advice on big strategic decisions as well as day-to-day matters. “He’s spent a lot of time with us,” she said. “He knows our business.”
When Altria planned its $61 billion spinoff of Kraft Foods, one of the biggest deals last year, it did not just turn to the usual suspects on Wall Street. Mr. Pruzan, who had had a long relationship with Altria, helped get Centerview into the deal, along with Lehman Brothers, even though Centerview does not underwrite securities.
Like Ms. Nooyi at PepsiCo, Irene B. Rosenfeld, the chief executive of Kraft, said she used Mr. Pruzan more as a consigliere than a banker. She said he recently helped her draft a presentation to Wall Street analysts, a task few investment bankers perform.
“They are discreet,” Ms. Rosenfeld said, adding that one benefit of working with a small independent bank, rather than a large one, is “you don’t have to worry about leaks.”
In the end, as is the custom on Wall Street, Altria added nearly half a dozen other firms to the advisory roster JPMorgan Chase, Credit Suisse, Citigroup, Deutsche Bank and Morgan Stanley among them but only after Centerview helped search the list.
Centerview, named for the view of Rockefeller Center from the firm’s 19th-floor offices, is something of a throwback to investment banks of an earlier time, before the emergence of financial supermarkets like Citigroup and JPMorgan Chase.
Greenhill was the first in the new wave of boutique firms. Evercore Partners, founded by Roger C. Altman, a deputy secretary of the Treasury under President Bill Clinton and a close friend of Mr. Effron, was the second big one; both are now public. Joseph R. Perella, long with Morgan Stanley, started his own boutique firm last year. And there are dozens of others: the Peter J. Solomon Company, Sagent Advisors and AGM Partners among them.
All these independent banks are trying to copy an investment banking model of the 1980s and earlier. Indeed, when Mr. Effron, Mr. Pruzan and Mr. Crawford first began chatting about their plans, they often reminisced about their early careers when they spent most of their time with clients instead of in meetings discussing whether they could take on clients because of potential conflicts with other groups in their banks.
“The more seasoned you become, the less time you have for clients,” Mr. Crawford said of the big-bank model, as he sat around a conference room table in Centerview’s offices. “We rarely run into the problem of having a conflict.” Even Mr. Chinn, who said he had “been threatening to become a banker for 20 years,” could see the potential for conflicts at big banks when he was practicing law.
Mr. Effron started his career at Dillon Read, a boutique bank that merged with S. G. Warburg, which in turn merged with UBS.
William R. Johnson, the chief executive of Heinz, said he used Centerview now because Mr. Effron had been his banker for 20 years, since his days at Dillon Read, and knew the business well.
“I remember Blair when he was an associate and would come in looking overwhelmed with stacks of papers,” he said.
Despite Centerview’s early success, it is clearly not tilting at the giants of Wall Street. “We’re too small to be competitors,” Mr. Pruzan said. “We work side by side with them.”
For Mr. Kilts, the decision to join an investment bank after a career at the top of corporate America was not as hard as other former chiefs might think. “My view of bankers was always more positive that others,” he said with a laugh.
Still, he said he tried to stick to the private equity fund, which is still in its infancy. “I don’t go to their meetings,” he said of Centerview’s bankers. With so many chief executives as friends, he said, “I sometimes know too much.” (Mr. Kilts is a board member of The New York Times Company; he is stepping down this year because he is overcommitted, he says.)
As for Centerview’s less-than-opportune timing, Mr. Effron seemed unperturbed. “I never believed you could time anything,” he said. “And you can’t count your chickens too early, either. Call us in five years.”