The Rising Star of Byron Trott, Buffett’s Favorite Banker

The Rising Star of Byron Trott, Buffett’s Favorite Banker

Byron Trott, chief executive and chairman of BDT Capital Partners in Chicago and an exec at Goldman Sachs Group Inc (NYSE:GS) for around two decades, moves in big money circles.

Following his departure from Goldman, Byron Trott put out his own shingle to take advantage of his strong network among the moneyed elite, setting up an investment and advisory firm designed to assist rich families in getting richer, as reported by John Lippert, Jeffrey McCracken and David de Jong of The Washington Post.

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More on BDT Capital Partners

The BDT in BDT Capital Partners stands for Byron David Trott, and sources say Trott keeps his thumb on the pulse of every deal from start to finish. The firm was created as a consulting business that offers businesses advice on whether to merge, expand or sell businesses. BDT also raises capital from its clients to invest in other companies, directly or through BDT’s private-equity funds.

BDT managed $6.3 billion in client assets as of the end of 2013, and is in the process of raising $5.2 billion more, based on SEC filings.

John Canning on Byron Trott

“Byron’s got a blue-chip list of people who trust him,” notes John Canning, chairman of Madison Dearborn Partners, a well-known Midwestern private-equity firm. “He’s played a key role in Chicago. Since most large investment banks are headquartered elsewhere, he’s been able to establish a unique practice advising on extremely large transactions.”

Connections to Buffett

Byron Trott has been involved in a number of Warren Buffett’s leading deals over the last dozen years. The Buffett-Trott relationship began during Byron Trott’s long tenure at Goldman. Henry Paulson, Goldman’s CEO at the time, was revamping outreach to rich clients back in 2002 and he gave Trott the key job of working with Buffett.

Just a year and change later, Buffett was praising Trott as he helped Berkshire with several profitable deals. “He understands Berkshire far better than any investment banker with whom we have talked and — it hurts me to say this — earns his fees,” Buffett noted in his 2003 shareholder letter.

Moreover, Trott brought Buffett into the deal to extract Goldman from serious margin calls during the 2008 financial crisis. As markets crashed, Goldman needed to beef up its balance sheet by offering nearly $10 billion in new shares. Trott convinced Goldman Sachs top brass they had to get Buffett involved.

“They gave me the latitude to negotiate any deal that I could,” Byron Trott testified as a witness in the 2012 trial of former Goldman director Rajat Gupta. Trott was only serving as a witness in the trial and was never accused of any wrongdoing.

In the end, Buffett drove a hard bargain. He got $500 million in annual interest on an investment worth $5 billion, but GS got their money when cash was hard to come by.

According to knowledgeable sources, Byron Trott has been involved in major deals involving at least 10 of the 30 wealthiest people in the world, such as Charles and David Koch, as well as heirs of the Mars Inc. fortune and members of the Walton family (Wal-Mart).

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