Alvarez & Marsal, the turnaround specialist that has guided Lehman Brothers through its bankruptcy, is forming a principal investment arm that will be led by the founder of Lehman’s private equity business Michael Odrich.
The buyout unit, called Alvarez & Marsal Capital, will target troubled companies, but also will make investments in stable companies.
The division will be an independent affiliate of Alvarez & Marsal and will not initially raise an external fund, a source said. The buyout unit will not invest in companies that have retained Alvarez & Marsal as an advisor.
Alvarez declined to comment beyond a basic statement about the launch of the business.
The firm, founded in 1983, has worked with private equity firms on restructuring struggling portfolio companies. Earlier this year, Alvarez formed a unit of 30 professionals focused on working with the struggling portfolio companies of private equity firms. The company had worked with private equity firms, but decided to formalise the practice. Alvarez works with portfolio companies in the early stages of distress, rather than on the brink of bankruptcy, Jeff Feinberg, a managing director with the company, told PEO in a prior interview.
Lehman, which filed the largest bankruptcy in US history last year, has worked with Alvarez through the process. The firm has assisted the former investment bank with spinning off several of its investment units, including its merchant banking funds, into management-owned independent entities.
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