NEW YORK – The bloodletting at Merrill Lynch & Co. has reached the firm’s profitable private equity group, which in January saw the firing of four top professionals.
Managing Director Theresa Clark, Director David Mullane, Vice President Michael Smith – all investment bankers in the private equity group – as well as Dale Meyer, a fund raiser on the Northeast private placement team, were recently let go, said a source familiar with the firm.
A spokesperson for Merrill Lynch confirmed the departures; executives from the private equity group did not return calls.
The personnel losses at Merril Lynch will no doubt have an impact on the increasingly competitive private placement industry at large. Newcomers to the field include PaineWebber, CIBC Oppenheimer, Wit Capital and Chase Manhattan Bank Corp., all of which are seeking to take bites out of the business of leading players such as Merrill Lynch and Donaldson, Lufkin & Jenrette. The newer firms have been searching for experienced talent to ramp up their efforts.
A source said Merrill Lynch’s efforts at cost-cutting had led it to “go after the high-cost big guys,” despite the fact that the firm’s private equity group had garnered huge profits in a year that otherwise brought losses to Merrill Lynch as a whole.
At least one limited partner who works frequently with Merrill Lynch was surprised at the firings. Anthony Hoberman, a senior vice president in charge of venture capital investing at Alliance Capital Management Corp., said he felt Mr. Meyer was “one of the best people in the industry. I don’t know why anybody would fire him. I expect he’ll be snapped up.”
Mr. Hoberman declined to comment on what impact the dismissals would have on Merrill Lynch or the private placement industry.
A source who works frequently with the private placement group said Ms. Clark had been with Merrill Lynch for almost 10 years. Mr. Mullane joined the group only last summer after departing New York placement agency Benedetto, Gartland & Co. Mr. Smith was part of the group’s direct deal team.
Merrill Lynch has announced it would cut 3,400 jobs worldwide. The spokesperson for the firm said the changes at the placement agency were part of the changes at the firm in general. He said the rounds of firing at Merrill Lynch are now over.
“We’re not concerned,” said David Andrews, president of Gryphon Investors, whose second fund Merrill Lynch is currently raising. “While we are disappointed to hear [about the firings], we maintain confidence in the franchise that Merrill Lynch has built and don’t expect it to affect our fund raising in any way.”
Other current and past Merrill Lynch clients include Clayton, Dubilier & Rice, American Industrial Partners and E.M. Warburg, Pincus & Co. L.L.C.
The spokesperson for Merrill Lynch said, “Last year was the best year in Merrill Lynch’s Private Equity Group history. We expect [Securities Data Corp. a data company affiliated with VCJ] data to show that we maintained our top ranking, and we expect to further grow our business in 1999.”