Would You Disagree With Steve Schwarzman?

John Waldron said he sure wouldn't, "at any moment."

But while Schwarzman -- the CEO of the world’s largest private equity firm -- said this week that an LBO over $50 billion would be a stretch, the Goldman Sachs president seemed to hint that anything is possible. "There is enormous liquidity in the market that could support big transactions," Waldron told me in a Bloomberg Television interview.

Waldron was the top private equity banker at Goldman during the golden era of buyouts in the two years through 2007. That same year, KKR and Goldman were among a group of buyers to acquire TXU. It was the biggest leveraged buyout in history, but it also ended up as one of the largest-ever bankruptcies. History shows that the top deals from that era generated mediocre returns.

Yet our intrepid colleagues broke that Walgreens Boots has been reviewing a take-private, which would be the largest LBO in history at more than $70 billion. The company held informal talks with sponsors including KKR, which has a long history with the drugstore chain's CEO, Stefano Pessina. Wall Street has met the idea with skepticism.

"It could be done," writes Bloomberg Opinion's Chris Hughes, who lays out his math for a deal plus the reality that it would require more than just a club of PE firms. They would also need more money from their investors. "But such arrangements do exist, and there is a real possibility of putting together such a syndicate to contribute the huge equity commitment. The private capital markets are deep."

The Changing Face of IPOs

Christian Meissner, the former head of Bank of America’s investment bank, also joined me in an exclusive TV interview that aired this week. He gave us a rare look at what a top banker sees as threats to the dealmaking model as we know it.

On the IPO model, he said many aspects that were previously handled by a bank (like research and liquidity provisioning) are now being handled by non-banks, while private equity firms are creating a "very significant" capital market presence. It's not limited to PE firms, by the way, hedge funds are included. This year Millennium hired a capital markets banker who used to work for Meissner. When asked if simply Citadel Securities and a law firm could handle an IPO, "Potentially that could happen, of course," he said.

Avoid the Sociopaths

Here’s some advice: “You have to be really careful you don’t accidentally invest in sociopaths.” That’s what Ben Narasin, a venture partner at NEA, told us this week for BTV when asked if SoftBank’s Masayoshi Son will transition and take chances on startup founders who are less dynamic than, say, Adam Neumann. “When your founder tips over from visionary leader to self proclaimed messiah, things can get very messy.”

Remember, WeWork helped trigger a $6.5 billion loss at SoftBank this week as it took writedowns on the office-sharing company and other investments. Here’s a telling chart from my colleagues on the cash burn at the Japanese conglomerate relative to the amount of cash it's taking in via financing activities (debt!) -- a fairly volatile figure that makes bankers a little more nervous:

The slump in SoftBank shares has wiped out billions of Masa Son’s net worth.

More On Wall Street

• Apollo, which is gearing up for a major privatization of credit markets, told investors this week that it’s on course to double its assets under management to $600 billion in five years. At rival Blackstone, the goal is to manage $1 trillion by 2026.
• Billionaires had a rough 2018. UBS’s newest report shows that wealth among the richest dropped last year for the first time in three years, erasing $388 billion of net worth in “a natural correction.”
• On Alan Howard: “In his investment firm’s darkest days, with performance sagging and billions of assets fleeing, Alan Howard was running out of options. So he turned to his top money managers for the fix,” Bloomberg’s Nishant Kumar writes.
• JPMorgan has a few techie things going on. They’re helping Airbnb and Amazon look more like banks, Bloomberg’s Michelle Davis reports, while also hiring from Silicon Valley Bank to focus on venture capital.
• If you want a lot of friends, go to Dartmouth. If you want to get paid, Wharton is where you go. Businessweek does a thorough walk-through on the top business schools in America, and we discuss it here for BTV.
• Here’s a don’t miss story about a struggle involving the managing director of Peter Thiel’s Mithril Capital, by Bloomberg’s Lizette Chapman.
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Looking ahead, don’t miss our “Future of Investing” summit on Nov. 20 down at Nasdaq where I’m leading a panel on the outlook for capital markets with dealmakers including Adam Smith, the head of KKR Capital Markets. And remember to catch me and Alix Steel next week Monday through Thursday for BTV’s Wall Street Beat -- we love your opinions so send them to us. More to come and have a great weekend,

Sonali