Michael Milken

"At most investment-banking firms, if they had filed to do a junk underwriting for $100 million but found they could sell only $50 million, they typically would cut the deal back to whatever they could sell. But Milken had for years now made it a point of honor that he would not cut back a deal. As he would testify with apparent pride in a deposition in mid-1986, “I would say also that in my entire career on Wall Street I have never backed out of a transaction once I’ve agreed to stand up to it, no matter how onerous it turned out to be.” This policy presumably sprang not only from Milken’s sense of probity, but from his knowing it was good for business. It was meant to—and generally did—incur a sense of deep indebtedness in the client. Marshall Cogen of General Felt Industries, for example, recalls that in the hard times of 1980 Drexel filed to raise $60 million for General Felt but found they could sell less than half of that; the firm took the rest. As Cogen said in an interview in 1986, “I have never seen that done by another investment banking firm—never. Today everyone wants to bank us—Goldman, Lazard. But no one else would have raised that money back in 1980. And without it I never could have developed the base I have.”"

"The magazine The Institutional Investor is celebrating its fortieth anniversary, and the room is full of stars, some with a slightly dimmer shine than others. Among those seated are the then ECB chief Jean-Claude Trichet, junk bond trader Michael Milken who was sentenced to prison for insider trading in the 1990s, as well as a number of heavyweight investors and finance people. During the dinner, one of the founders of the largest and first buyout firms, KKR’s Henry Kravis, stands up and gives a short speech. He talks about how his firm set the industry standard for fees in 1976. They didn’t really know what level to settle on, so they randomly chose to take 20 percent of the profit. — When I look back, you might as well have gotten 25 percent, he says with a laugh, directed at his colleagues."

"When we were at our limit with our usual suspects of lending, we turned to still more alternative means of financing. One of those was a controversial financier named Michael Milken, who was known for creating a new market for high-yield “junk” bonds. The rise of Milken and the firm Drexel Burnham Lambert created a revolution in deal financing for us. Their agility to buy and price offerings dramatically changed the acquisition game—and saved me incalculable hours in front of clients on road shows. We knew what level of debt and the terms that were available if we had Drexel on our team."

"Between our lunch and the time Murdoch finalized buying into Fox, he’d gone to Australia, and then on his way back to New York stopped for two days in L.A. He called and I invited him to come over to the studio for a chat. And, here’s where my North Star of serendipity once again showed up: three seemingly disparate events threaded themselves into the opportunity of a lifetime—at least my lifetime. First, that particular day was Michael Milken’s annual investors’ conference, called by some the Predators’ Ball. Milken was at that time the biggest financier of companies in the United States. He had previously called to say he had just financed John Kluge’s buyout of public shareholders at Metromedia, which owned six blockbuster television stations. They wanted to have a reception away from the place where the conference was being held, and Milken asked, as a favor, if I would give them a soundstage to have it on. The afternoon of that day, Murdoch arrived in my office. And finally, as soon as Rupert sat down in my conference room to talk, my assistant buzzed me to say that Mike Milken and John Kluge were in my reception room to say hello before their party."

"The McCaw strategy involved sending several different messages: to convince LIN shareholders that the better deal was with McCaw; to persuade others in the cellular industry that McCaw was the better steward of LIN's critical licenses; and to build pressure on BellSouth through political means and by convincing them they were in a fight with a ruthless opponent. Normally eager to avoid reporters, McCaw started sending signals through the news media that he wanted LIN at practically any price. McCaw compared his company to anti-imperial Scottish warriors, the Islamic Jihad, and the anti-Soviet Afghan rebels. "We want them to think we're maniacs," he told Forbes magazine. He sent John Stanton, Rufus Lumry, and other McCaw executives on a worldwide trip to raise money from bankers who were privately assured that McCaw would make no crazy offers. The group raised $5.5 billion—proof that Craig McCaw was not dependent on Michael Milken, who was about to have serious trouble with the law. Meanwhile, on Wall Street, the McCaw team tried to raise doubts about BellSouth's offer by pointing out the Material Adverse Change (MAC) clause in the Baby Bell's offer. Routinely used by many compa- nies in buyout offers, the MAC clause allowed the cautious BellSouth an out if problems erupted. The McCaw company had similar outs in its offer, but the team stressed how long Bells usually took to close deals compared to McCaw's history of rapid closures. A slow-as-molasses Baby Bell deal, they implied, stood a good chance of triggering the MAC clause and killing the whole arrangement. Other McCaw aides tried to make political trouble for BellSouth, telling state regulators that the LIN deal would drive up local charges or violate agreements. Two U.S. senators from Washington State agreed to introduce a bill to block BellSouth. Then came McCaw's flanking maneuver, what Perry calls "the beginning of the end" for BellSouth."

"McCaw's goal, as always, was to preserve his independence, flexi- bility, and control. Although he had qualified for the MCI deal on the basis of Affiliated's balance sheet, McCaw ultimately decided to go with a different form of financing, perhaps to show a measure of indepen- dence from his Boston associates. He went with junk bonds, a relatively new form of corporate IOUs at high interest rates, recently popularized by an already legendary trader at Drexel Burnham Lambert named Michael Milken."