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Where to invest billions of dollars is the literal definition of a rich person's problem, but Byron Trott and Michael Dell think they have a solution. Trott is a former Goldman Sachs investment banker. Dell is the technology billionaire entrepreneur. Each has their own successful investment firms, BDT Partners and MSD Capital, that traffic in billions of dollars.
And in October the pair decided to join forces to create a single player that caters to the global elite, a transaction that demonstrates how crucial tycoon families and private capital have become to high finance. BDT is a so-called merchant bank. Trott works with billionaire tycoons, such as Warren Buffett and the Reimann family to help them invest their fortunes, arrange high-powered introductions, and otherwise assist them with making sure their generational wealth endures.
MSD, once just the asset management arm of the Dell family, is now a full-fledged private capital manager that with external funds does corporate buyouts as well as credit and real estate investing. Its chief executive is Gregg Lemkau, another prominent alumnus of Goldman Sachs. Together, BDT and MSD hope to create a virtuous circle where the rich and powerful can get one-stop shopping for their financial needs. The combined firm will manage around $50bn.
According to Credit Suisse, the balance of global wealth at the end of 2021 was roughly $450tn. Nearly half of that figure was controlled by the top 1 per cent of households. At the same time, the baby boom generation is set to transfer something like $70tn to their heirs, which could explain why private capital firms now see elite families and individuals as important to their growth as pensions and sovereign wealth funds.