David Rubenstein: evaluation

Transcript context

…Well, there would be partners of a smaller investment bank, say, the way Goldman was a long time ago, but now it’s just a publicly traded company. Okay. When you’re talking about that concept, yes, there were firms that were private, and they were all privately traded: Morgan Stanley, First Boston, Goldman Sachs. Now there are very few that are just privately owned. There’s Brown Brothers Harriman and a few others that are still private. In the private equity world, most of the private equity firms are private partnerships. There are a few that are publicly traded: Carlyle, Blackstone, KKR, Apollo, maybe TPG will come public, and so forth. I think CBC is another one that’s public. But generally, they are privately owned because they’re too small to be publicly traded companies. If you manage a fund of $1 billion or $2 billion, that’s not likely to produce the cash flow that will make a public company seem really warranted for that status. Why are they partnerships? There’s a lot of smaller companies that are just privately owned. Law firms are often partnerships. What’s the transactions cost advantage of having a private equity company be a partnership?…

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