(PrivateEquityCentral.net) Ben Sullivan and William Riddle, two senior placement agents in Merrill Lynch’s private equity placement group, resigned today to join financial services boutique Lazard Freres.
Sullivan was head of project management at Merrill Lynch. He reported to group head Kevin Albert. Sullivan interfaced with general partner groups and oversaw due diligence on funds. Riddle was head of sales.
The two will join Lazard Freres to form a private equity placement group, according to Albert, who said he was unsure whether the two would raise Lazard funds only or build a third-party fund raise-up business.
Sullivan and Riddle could not be reached for comment. A consultant at a competing placement firm said Lazard was probably launching a third-party placement agency with the hiring. “It doesn’t make any sense otherwise,” he said. “To build a placement agency, you need a high profile guy with LPs, and somebody who knows how to generate deal flow from GPs. With this [hiring], they pick up both sides of the coin.”
Sullivan co-ordinated fundraising for The Third Cinven Fund, which closed on E4.4bn in July 2002. Firms are increasingly insisting on a ‘key man clause’, which will guarantee the involvement of certain individuals for the duration of fundraising.
A number of sources said that Lazard had been attempting to woo placement agents for some time. The firm apparently had difficulty hiring a team purely to raise Lazard funds.
Lazard’s private equity affiliate is called Lazard Capital Partners. The group invests in buyouts and industry consolidations and, through Lazard Technology Partners, in venture capital deals.
Merrill Lynch has served as a launching ground for many private equity placement careers over the years. Layoffs and departures at Merrill and other placement businesses, such as that of Credit Suisse First Boston, have accelerated as the private equity market has suffered poor returns and skittish investors over the past three years. “We’re trying to maintain the right size for the placement business in this market, which is smaller,” said Albert.
Both Lazard and French investment bank Société Générale, which is also planning to launch a private placement group, see placement work as an additional means of picking up new mandates.