"That calculus is part of our thinking." Company officials say there are no plans to merge GMAC and Chrysler Financial. "Finance companies obviously do better when they can borrow at low interest rates," says Snow. Such "deleveraged buyouts" may prove shrewd: A highly leveraged auto-finance company would incur higher borrowing costs. Unlike a typical industrial buyout, Cerberus didn't borrow against GMAC's assets, a tactic it intends to repeat when it picks up Chrysler Financial, the carmaker's finance unit. It has put together a portfolio of financial services companies, from banks like Japan's Aozora, to captive finance operations like GMAC, to consumer lending, mortgage finance, and commercial leasing businesses. The firm's interests range from aerospace to hotels, but the company is doing more than scooping up assets. He drives a Chevy pickup, and the closest thing to fine art in the firm's Park Avenue headquarters is a poster for the hip-hop group the Fugees that hangs in a lieutenant's office. Its deal to buy Israel's Bank Leumi recently crumbled.įeinberg, a self-styled anti-elitist, relishes deals where he beats established players like KKR, as he did with the 2006 acquisition of Albertson's, the grocery chain.
Shares of Cerberus-controlled building products maker BlueLinx have gone nowhere since its 2004 IPO. Cerberus has endured its share of defeats too. "This is a highly intelligent group of people," says dealmaker Wilbur Ross, who has bid against Cerberus - and lost. In automotive, the firm has a team including David Thursfield, a Ford ( Charts, Fortune 500) veteran, and Tom Gale, a former Chrysler designer. So there's little need for telecom bankers at Cerberus with Timothy Price, a former president of MCI, on staff. Of Cerberus's roughly 300 investment and operations people, more than 150 are former top executives. Other private-equity firms rely heavily on consultants and bankers for deal diligence. Snow, 67, formerly the Treasury Secretary and chief executive of railroad company CSX ( Charts, Fortune 500), embodies Feinberg's penchant for collecting management expertise and then letting the executives be the face of the company. (Cerberus's portfolio companies currently generate more than $60 billion in annual revenues.) When he realized that vulture investing would take him only so far, he plunged into turnarounds. He started his own firm with $10 million. Feinberg, now 47, had learned credit markets under Michael Milken at Drexel Burnham Lambert. Part hedge fund, part private-equity firm, Cerberus began 15 years ago as a distressed-debt shop. BofA's former consumer-credit honcho is fixing GMAC's ResCap.
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