Matchmaker, Make Me a Match

Corporate mergers are usually a gamble for the firms involved, but there is always one certain winner: the investment banking house that acts as the matchmaker whenever one firm begins courting another. The investment banker's main task is to advise his client on which financial tactics to use, either in taking over another company or in fending off an unwelcome suitor. If one company wants to buy out another, should it offer cash, cash and stock, or a combination of cash, stock and corporate notes? If a company is trying to avoid being bought, should it issue more stock or buy back some of its existing shares on the open market? Few corporate executives could readily answer such questions. Thus they usually turn for help to an investment banking firm.

This corporate matchmaking service is expensive, and million-dollar fees for a few weeks' work are common. According to one estimate, investment bankers this year will earn $500 million from the 60 largest corporate couplings. Top investment bankers earn $1 million and more annually, while vice presidents still in their late 20s make $150,000. Says Felix Rohatyn, 53, of Lazard Freres, who is one of the most respected men in the field: "Things seem to be getting out of hand, both in the fees and in the size of the deals being put together."

The biggest name in merger making at the moment is Morgan Stanley, which is representing Conoco. It will earn a record fee of nearly $15 million on the eventual agreement, no matter which company is successful. Morgan Stanley's merger team is led by Robert Greenhill, 45, a dapper dresser who wears wide suspenders dotted, appropriately enough, with large dollar signs.

Seagram has retained two investment banking firms, Lazard Freres and Shearson Loeb Rhoades, in its effort to snare Conoco. Rohatyn and his Lazard Freres staff of only a dozen handled $10 billion worth of mergers last year. Shearson's group is led by Managing Director Mark Millard, 72, who in 1963 advised Seagram Chairman Edgar Bronfman to buy Texas Pacific Oil Co. for $326 million. Seagram last year sold Texas Pacific to the Sun Oil Co. for $2.3 billion; that money is now providing the bulk of funds used in the bidding for Conoco.

Mobil, another Conoco suitor, has hired the merger team of Merrill Lynch White Weld, which is headed by Carl Ferenbach, 39. Du Pont has retained the services of First Boston Corp., whose merger mentors, Joseph Perella, 39, and Bruce Wasserstein, 33, last March masterminded Fluor's $2.7 billion purchase of St. Joe Minerals. Their fee for that deal: $3.5 million. If Du Pont wins Conoco's hand, First Boston could pocket as much as $15 million. But even if some other firm walks off the winner, First Boston will still claim a $750,000 loser's fee.

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