My first deal turned out to be the world's second-largest that year.
The first great break in my career at Lehman Brothers, which I had joined in 1972, came six years later, in 1978, when I found myself handling the sale of Tropicana Products, a company known around the world for its orange juice.
It was an extraordinary assignment. A lowly associate was suddenly asked to help conduct the second-largest merger and acquisition (M&A) in the world that year.
"Can you be at our head office in Florida tomorrow morning at a quarter to eight?" It was a Friday evening in the winter of 1978. I was in Chicago on business when the urgent summons reached me from Kenneth Barnebey, Tropicana's president.
Tropicana was to be sold to food giant Beatrice Foods, and Barnebey wanted my advice on which of the proposed deal structures would be best for the company's shareholders. The two companies had already reached an agreement in principle. The transaction had to be announced before the stock market opened on Monday.
A deal of this kind would ordinarily be led by a partner. I had met Ken only once, some months earlier. I flew to Florida with no change of clothes and no time to prepare. On the plane, one question kept circling in my mind: How does one actually do an M&A deal? I held no managerial post and had never run such a transaction myself.
All I had to help me understand the proposed deal was a copy of the Stock Guide, a volume that carried the financial particulars of publicly listed companies. I studied the figures as best I could, trying to put myself in Tropicana's place. If I were sitting on their side of the table, what would I want?
Delayed by a snowstorm, the plane landed at four in the morning. A long day had already begun. I lay down briefly at a motel, then arrived at the company at half past seven, rumpled and disheveled, only to find Ken impeccably turned out in a suit.
"There are three options," he said. "Tell me which one we ought to choose at the board meeting that begins at nine."
The paper he handed me set out the ways in which Tropicana's shareholders might be paid. Each option combined cash with common stock and other forms of Beatrice securities, including convertible preferred stock.
I was terrified. Here was a colossal deal, and I had never seen one through. I was not a partner, yet I had become Lehman's representative. I had never so much as attended a board meeting. I telephoned Lehman's leadership, but no clear answer came. I was passed from one person to another. At last Bob Rubin, the firm's No. 3, came on the line and gave me what I needed.
"Well, alternative No. 1, you shouldn't do that," he said. "No. 2 or 3, you could do either of 'em. You figure it out. Good luck."
At the far end of the boardroom table sat Anthony Rossi, Tropicana's founder and chairman, Italian-born and, to my eyes, the very image of Marlon Brando as the Godfather. He motioned me to the seat beside him and announced to the directors, "Mr. Schwarzman from Lehman Brothers is going to tell us what to do."
What exactly I recommended, I no longer remember. The board meeting ran for more than two hours, and by the end of it a deal worth $488 million—the second-largest M&A transaction in the world that year—had been settled.
That evening I was supposed to attend a dinner party with my wife, Ellen, whom I had married during my Harvard years. I had forgotten it entirely. Over the telephone I offered abject apologies, which did little to soften her fury.
The snow was so heavy that I did not reach home until three the following morning. I lit a fire, put on the Bee Gees' "Saturday Night Fever" album and, gazing at a glass of brandy, looked back over the incredible 24 hours that had just passed.
I had gained confidence, I had withstood the pressure. As for why Ken had chosen to call me—the one banker among many he had met only once—he was kind enough to say, "I judged that you could explain complicated things simply before a board of directors."
That year, at age 31, I was elected partner, effectively joining the senior ranks of the firm.
I went on to advise major companies, among them RCA, one of the great media and electronics enterprises of the 20th century. In 1980, The New York Times ran an article about me under the headline "Stephen Schwarzman; Lehman's Merger Maker."
In time, my compensation rose to the third-highest in the firm, behind only the chairman and the president. My success stirred resentment among older partners. The strife inside Lehman Brothers, and its pitiable end, I will describe in the next installment.
Originally published in the Nikkei, October 2026