FORBES.COMmoney on carried interest,” says Ludovic Phalippou, Oxford
professor and author of Private Equity Laid Bare. “What
this says is: I don’t make money only with carried interest,
I make tons of money with management fees.”W
hen the world’s biggest private eq-
uity fi rm, Blackstone Group, went
public in 2007, cofounder Stephen
Schwarzman threw an infamous
star-studded 60th-birthday bash at
New York’s City’s Park Avenue Armory that many consider
to be the high-water mark of precrisis excess. That year, bil-
lionaire Schwarzman enjoyed a $684 million payout.
But then came the Great Recession, the massive govern-
ment bailout of fi nancial institutions and the Occupy Wall
Street movement. Schwarzman and other Wall Street deni-
zens suddenly became villains. So it’s no surprise that the
current boom in buyout billionaires is happening out of the
spotlight.
By most accounts, the new wave of GP-stake deals start-
ed in 2015 when Vista Equity Partners’ founder, Robert F.
Smith, went to talk to investment banker Saul Goodman of
Evercore about fi nding capital in the private market. No oneembodied the new era of private equity more than Smith.
Vista invested exclusively in software deals, an industry
once seen as off -limits to leveraged buyouts and ignored
by the biggest PE fi rms. Smith had proved that systemic
software LBOs were not only possible but exceptionally lu-
crative, scoring some of the private equity industry’s best
returns.
The leading private equity billionaires preceding Smith—
like Schwarzman, David Rubenstein and Henry Kravis—
had all gone public, listing their private equity fi rms on the
stock market in an attempt to cash out and bring in per-
manent capital. But they were also forced to contend with
public company challenges—from analyst calls to seeming-
ly irrational market gyrations. Smith didn’t want the hassle
of dealing with stock market investors on a quarterly basis.
So he tapped Goodman, who worked at Evercore, the
small investment bank founded by former deputy U.S. Trea-
sury secretary Roger Altman. Together they met with Mi-
chael Rees, who ran Neuberger Berman’s Dyal Capital unit,
which had been buying stakes in hedge funds. In July 2015,
Dyal bought more than 10% of Smith’s Vista Equity at a
valuation of nearly $4.3 billion. At the time, Vista had only
$14 billion under management; today it has $50 billion.NOVEMBER 30, 20 19108
THEINVESTIGATIONTAMER:^AARON^ DAVIDSON/GETTYIMAGES;^ STERNLICHT:^ MICHAELPRINCE;^ KLINSKY:^CHRISTOPHERGOODNEY/BLOOMBERG;^FELICIANO^AND^ EGHBALI:ROBERTGALLAGHERFOR^ FORBESNEW BILLIONAIRES:
A BAKER’S DOZEN
IT’S BOOM TIMES IN PRIVATE EQUITY, AND THANKS
TO A QUIET FLURRY OF GENERAL-PARTNERSHIP-STAKE
SALES, NEW BILLIONAIRES ARE IN BLOOM.SAMI MNAYMNEH, 58
H.I.G. CAPITAL, MIAMI
ASSETS: $34 BIL NET WORTH: $4 BIL
A former managing director at Blackstone, Mnaymneh started the firm
in 1993 with Tony Tamer, a former partner at Bain. Masters at buying
medium-size businesses like Jenny Craig and Mississippi sausage
maker Southern Quality Meats, many of which produce huge returns.
The duo also runs a large global credit business and publicly traded
BDC, WhiteHorse Finance.TONY TAMER, 62
H.I.G. CAPITAL, MIAMI
ASSETS: $34 BIL NET WORTH: $4 BIL
A graduate of Rutgers, with a master’s in electrical
engineering and computer science from Stanford
and an M.B.A. from Harvard. Lebanon-born Tamer
and his wife, an MIT graduate, are active philan-
thropists. Endowed the Tamer Center for Social
Enterprise at Columbia Business School in 2015.JOSÉ E. FELICIANO, 46
CLEARLAKE CAPITAL, SANTA MONICA, CA
ASSETS: $10 BIL NET WORTH: $2.1 BIL
A Puerto Rican who studied at Princeton on schol-
arship and worked for fi nancial fi rms like Goldman
Sachs and Tennenbaum Capital. Started fi rm with
Behdad Eghbali in 2006. Clearlake focuses on
three seemingly unrelated sectors—soft ware, indus-
trials and consumer services. Prominent invest-
ments include Sage Automotive and Unifrax.BEHDAD EGHBALI, 43
CLEARLAKE CAPITAL, SANTA MONICA, CA
ASSETS: $10 BIL NET WORTH: $2 BIL
Iranian-born Eghbali may be the world’s youngest
private equity billionaire. He started his invest-
ment career at TPG Capital, the Texas buyout
fi rm founded by David Bonderman. He also spent
some time working in business development for
Turbolinux, a soft ware company focused on the
Japanese market.BARRY STERNLICHT, 58
STARWOOD CAPITAL, MIAMI
ASSETS: $60 BIL NET WORTH: $3.1 BIL
Specializing in real estate investments, Stern-
licht founded Starwood in 1991 and later the
W hotel chain and Starwood Property Trust,
one of the biggest mortgage REITs. After many
years in Connecticut, Sternlicht moved his firm
to Miami in 2018.STEVEN KLINSKY, 63
NEW MOUNTAIN CAPITAL, NEW YORK CITY
ASSET S : $20 BIL NET WORTH: $3 BIL
Aft er earning a J.D./M.B.A. from Harvard, Klinsky
cofounded Goldman Sachs’ leveraged buyout
business in 1981 and then spent years at white-shoe
buyout fi rm Forstmann Litt le. In 1999, he founded
New Mountain Capital, which specializes in mid-
size companies. Its May IPO of biopharma services
company Avantor produced a multibillion-dollar
windfall.