The Man Who Schooled Wall Street

John Chapple, Rebel Images / Newscom M&A legend Bruce Wasserstein, who died Wednesday at 61, showed Wall Street that business could be done profitably and relatively risk-free—without bringing down the system or impoverishing taxpayers.

Bruce Wasserstein, the Wall Street M&A titan who died unexpectedly Wednesday at the age of 61, lived an extraordinary life of many chapters that together provide invaluable lessons for a Wall Street community still shaking from the financial calamities of the past few years.

Although risk-taking is a Wall Street hallmark, in truth, the business is full of tremendously risk-averse people who are more comfortable playing with other people’s money. At first, Wasserstein was in that camp, but as he matured and his M&A advice became less tried and true, he began to take risks with his own growing fortune. He was the only head of a Wall Street firm who was also the head of his own separate unaffiliated private-equity firm—something unheard of before him and unlikely to be repeated. And in a system that appears to have become undone because of a lack of focus, he embodied it. While Wasserstein may be remembered for his strong-arm M&A tactics and his “dare to be great” speeches, his greatest legacy may be one not of destruction but of preservation. By keeping Lazard’s time-tested business plan of providing only M&A advice and asset-management services to its clients—a business philosophy created by Lazard’s one-time patriarchs André Meyer, Felix Rohatyn, and Michel David-Weill—Wasserstein showed the rest of Wall Street that business can be done profitably and relatively risk-free, without bringing down the capitalist system and costing taxpayers $12 trillion and counting. Lazard has never taken a dime of TARP funds nor taxed our system in any way.

Wasserstein made more money from investment banking than any man on the planet.

The first chapter of Wasserstein’s life opened in Brooklyn, New York, where Bruce was a precocious Yeshiva student known for making up his own rules at Monopoly. He discovered early on that a lot more houses and hotels could be purchased by borrowing from the bank, even though that idea was not part of the game, at least the way the rules were written. His father owned a ribbon-manufacturing business in Lower Manhattan. Slowly but surely, the business thrived, allowing the family to move from Brooklyn to the Upper East Side when Bruce was a teenager. He enrolled at the now-defunct McBurney School, then a West Side institution from which Lazard’s Rohatyn also graduated. Soon enough, Wasserstein was testing the rules again, and after he wrote some silly headlines for the school newspaper, of which he was the editor, the school’s headmaster kicked him off the paper.

At 16, Wasserstein left New York for the University of Michigan, where the somewhat slovenly and unkempt but brilliant young man wrote revolutionary screeds for the university’s daily newspaper. As a reporter for the Michigan Daily, he covered the uprisings in Berkeley as a campus correspondent. After Michigan, Wasserstein went to Harvard, where he was one of the first to enter a joint program in business and law. He also married the woman who would become his first wife, whom he had met at Michigan. (Wasserstein would eventually marry four times.) During his postgraduate traveling Knox Fellowship to Cambridge, England, he studied British merger law while his fellow students worried about America’s involvement in Vietnam.

When he returned to New York from England, Wasserstein went to work at Cravath, Swaine & Moore, the preeminent law firm, where almost immediately he impressed senior partner Sam Butler with his energy and his rare brilliance in M&A tactics and strategy. He also impressed Cravath’s clients, as well as Joe Perella, then the lone person in First Boston’s fledgling M&A group. Perella quickly latched on to Wasserstein and figured they would make a dynamic duo. Perella was right. They became a pair of M&A insurgents.