The Pressure Of Great Expectations

Some of the most successful investment banking start-ups have begun with just a handful of bankers, some borrowed office space and a secretary.

Joseph Perella, right, chairman of Perella Weinberg Partners, says building a top investment bank requires major investment. From the left are Peter Weinberg and Tarek Abdel-Meguid, partners.

Joseph R. Perella is taking a much more audacious tack.

Perella Weinberg Partners may be just a year and a half old, but it is already acting — and spending — like a member of the Wall Street establishment. It has raised $1.1 billion, hired more than 22 brand-name bankers as partners and set up shop in the General Motors Building on Fifth Avenue in Manhattan. Mr. Perellas fifth-floor office teems with construction workers and painters, and it recently took delivery of a 50-inch plasma television screen, to be hung in the hallway.

But Mr. Perella, the deal maker who worked on such landmark transactions as the takeover of RJR Nabisco, makes no excuses for leading one of the most expensive and ambitious financial start-ups in Wall Street history.

Do you know why most restaurants fail? he said recently, leaning back on his chair in one of the few finished conference rooms in the office. They dont have enough money to stay the course. They have enough cash to open the business, and then if people dont flood in the first month, they close down. You have to have enough money to stay the course.

There is one thing that Mr. Perella is lacking, however: a flood of the type of headline-grabbing, blockbuster mergers — at a time when there are so many — that made him one of the few bankers who has come close to becoming a household name.

Rivals have not-so-privately relished Perella Weinbergs lack of marquee advisory assignments so far, especially in light of the buzz that preceded its creation. Given Mr. Perellas track record, however, Wall Street denizens are hardly counting the firm out.

The question is not whether Joe will print a big deal, its when, said Jack Levy, chairman of Goldman Sachss mergers practice. This is a team of proven financial advisers. They have an important place in the M.& A. advisory business.

The firm has already had some multibillion-dollar assignments — all told, $34 billion worth — and worked on some deals that never happened, $60 billion worth. Their largest deal to date was overseas: the firm advised the French real estate giant Unibail in its $19 billion acquisition of Rodamco Europe. In the United States, it advised Pathmark on its sale to A.& P. for nearly $700 million.

Still, even some close friends of Mr. Perella, who founded First Bostons mergers and acquisitions department in 1979 and co-founded Wasserstein Perella in 1988, have questioned why he would seek to reinvent himself yet again at age 65.

He certainly could have rested on his laurels — or returned to Morgan Stanley, where he had been chairman of mergers for more than a decade before stunning Wall Street by walking out after a bruising battle over the future of the firm with its chief executive, Philip J. Purcell.

In his first public comments on his departure, Mr. Perella said of Mr. Purcells leadership: I couldnt sanction what was done, and by being there as a member of the management committee, I was blessing it. My judgment was that if I stayed it would be harder to change it. I thought my protest resignation would effect change, and it did.

Mr. Purcell was later ousted by the board in part because of a flurry of high-profile departures, including that of Mr. Perella.

When John J. Mack was named chief executive of Morgan Stanley, Mr. Perella was offered an opportunity to return to the firm. He ultimately decided against going back, but he demurred to explain why. Everyone knows, he said.

Some people involved in the discussions say that Mr. Perella had demanded that Zoe Cruz, Morgan Stanleys co-president and an ally of Mr. Purcell, be moved aside as a condition of his return, a demand that Mr. Mack refused.

(Still, Mr. Perella regularly returns to Morgan Stanley; his longtime barber has his shop in the basement of the building where the firm has its headquarters. )

Along with another former Morgan Stanley colleague, Tarek F. Abdel-Meguid, Mr. Perella spent the summer in an office at the law firm of Weil, Gotshal & Manges, contemplating his future and taking suggestions over lunch with Sanford I. Weill, Stephen A. Schwarzman and other Wall Street deal makers.

Once it became clear to Mr. Perella and Mr. Meguid that they were not going back to Morgan Stanley, they came up with a grand plan: to create a boutique bank far bigger than a merger adviser, one that would also include a large asset-management business.

And unlike many of the most successful boutiques, which started on a shoestring, like Evercore Partners or Greenhill & Company, the two men wanted to start much, much bigger.

Mr. Perella said he told Mr. Meguid: If this is like starting Wassperella — referring to Wasserstein Perella, a firm he started with Bruce Wasserstein — or an M.& A. boutique, Im not interested. Been there, done that.

So he and Mr. Meguid went on a round-the-world fund-raising effort. Along the way, they hooked up with Peter A. Weinberg, a former Goldman Sachs partner whose grandfather, Sidney, is considered the patriarch of the modern Goldman Sachs. Mr. Weinberg and his family were among 11 investors who invested $1.1 billion in the firm.

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