Guy Hands was already a star at Goldman Sachs when in 1994 he approached the new CEO, Jon Corzine, to pitch his plan to buy and turn around a string of faltering English pubs. Corzine said no. Hands jumped ship to Nomura Securities, where over the next decade his team acquired 15 businesses with an aggregate enterprise value of some $27 billion. But the English pub turnaround would remain his favorite project: Hands acquired a wide array of “tied” pubs, named as such because they were bound to particular breweries and forced to buy beer at a substantial markup. Hands’s team worked with government regulators to free the pubs from the antiquated system and force the breweries to compete for sales.
These days it’s tough to find an old buyout pro who’s more bullish on the future of the European private equity industry than Hands, 52. Last month he told an audience at Harvard Business School that the economic perils facing Europe mean that many businesses will soon be on the auction block — and that private equity will be there to snatch them up at bargain prices. “Governments will start selling assets across Europe much like Thatcher did in the 1980s,” he said. “Private equity will have huge advantages.”
Hands, who calls himself the father of securitization, said ailing businesses in the euro zone will need new strategies from buyout teams looking for value over a decadelong horizon. What those businesses don’t need, he said, are CEOs continuing to obsess over quarterly numbers. Then the chairman and CIO of London-based private equity shop Terra Firma, a Nomura spin-off, took a swipe at the hedge fund industry.
“If you are looking for a career just focusing on making money, then please don’t come into the private equity industry,” he cautioned HBS students. “If just making money is what motivates you, then focus instead on the banking industry or the hedge fund industry. Leave private equity and the creation of long-term value to those of us who love making businesses better.”
