With two key clients looking to make a trade, but neither wanting to give up control, this firm found a secret ingredient that brought all participants to the table and sent them away satisfied.

Although I’ve spent nearly four decades on Wall Street watching deals come and go, I still get excited when I see a pioneering idea evolve into a cutting-edge transaction. That’s why one deal holds a special place in my heart: the formation of brokerage-services firm BNY ConvergEx Group. It was neither the biggest nor the most profitable deal, but it drew on our firm’s expertise and brought together multiple historical relationships to create an exciting new company.

It all began in 2002, when Dean Mihas, then a rising star of buyout firm GTCR Golder Rauner, called to discuss the controversial report we had published on Direct Market Access, opining that electronic trading platforms would strongly squeeze the traditional equity sales, trading and research platforms employed by most full-service firms.

I became well-acquainted with the traditional platforms of the major firms during my 17 years at CS First Boston, where I headed various groups including global equities, asset management, equity and fixed-income research and sales. While teaching at Columbia, I started my own shop to provide strategic advice and consulting to bulge-bracket firms and large banks to help their businesses grow.

Like most innovative deals, this one didn’t come quickly. For more than a year we combed over the markets with Dean and GTCR partner Collin Roche. At the same time, our firm was working with Bank of New York on asset-management projects. BNY had a large institutional agency-brokerage business. Although it was highly profitable and synergistic with many BNY clients, the business was considered volatile.

Thus grew a kernel of an idea: BNY Securities offered a great platform company for GTCR to build and buy equity-trading businesses. Both Mihas and Roche of GTCR and Joe Velli and Charlie Rappold, senior executives of BNY Securities, had aspirations to become a leading-edge technology provider in the industry. But a partnership made in heaven resulted in hellish negotiations. BNY could not abandon its clients by selling the business; GTCR wanted to control the entity to expand it into new technology-driven sectors. Enter the catalyst…

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