Billionaire paying off students’ loans is known for savvy dealmakingMay 21, 2019
Buyout king Robert Smith was wildly generous to the graduates of Morehouse College last weekend — but he’s savvy and hard-nosed when it comes to business.
Smith, who runs private-equity giant Vista Equity Partners, wowed college students Sunday when he vowed to pay off the student loan debt of Morehouse College’s Class of 2019, which boasted nearly 400 graduating seniors.
The gift, which could be as high as $40 million, accounts for less than 1 percent of Smith’s $5 billion estimated net worth — a war chest built over decades thanks to his talent for tough dealmaking.
In late 2016, Smith successfully stared down the Department of Justice when the regulators sought more time to review his proposed buyout of Cvent, a cloud-based event planning software company.
“No,” was the bold reply of Smith’s Vista Equity, The Post exclusively reported at the time.
Vista, which was launched in 2000 and now boasts $46 billion in assets, believed the Justice Department lacked evidence to block the deal, according to sources close to the talks. Even so, insiders noted that companies are typically deferential and acquiesce to the regulators’ demands.
“He is playing chicken with the DOJ,” a source said at the time.
Smith’s gamble paid off: He completed the $1.65 billion takeover of Cvent just four weeks later.
Smith, a Cornell-trained chemical engineer, applies a distinctively formulaic approach to Vista’s tech investments and acquisitions.
“Software companies taste like chicken,” Smith said at a conference a few years ago, according to a 2018 Wall Street Journal profile. “They’re selling different products, but 80 percent of what they do is pretty much the same.”
Vista is likewise known for firing high-paid management at the companies it acquires, partly by subjecting all employees to a cognitive test that was first developed by IBM. The benefits of the test are two-pronged: It identifies workers who are high-performing and relatively cheap.
Another cost-cutting tactic: Buy a company that’s based in a pricey area like New York or San Francisco and move it to a lower-cost city. “Many employees won’t make the move, allowing Vista to hire cheaper replacements,” the Journal noted.
When it comes to dealmaking, Vista’s hedge funds will typically buy a small stake ahead of a buyout, lowering their overall costs when they acquire the company’s remaining stock at a premium.
After stints at Goodyear and Kraft, Smith cut his financial teeth at Goldman Sachs, where he advised on more than $50 billion in mergers and acquisitions involving tech titans like Apple, Microsoft, Texas Instruments and eBay. He was the first at the storied investment bank to focus on the space.
A regular on the New York social circuit, Smith in 2015 married Hope Dworaczyk, Playboy’s 2010 Playmate of the Year, in a lavish ceremony off of Italy’s Amalfi Coast. John Legend, Seal, Brian McKnight and DJ Cassidy were among the performers.
Reps from Vista didn’t respond to requests for comment.
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