Financial Tycoon Michael Milken

Gordon Gekko.

Quick ... tell me who this man is!

If you're still struggling, Gordon Gekko was a corporate raider. He was portrayed by Michael Douglas in the 1987 movie "Wall Street".

He's the one that brought the phrase "Greed is good", to silver screens and twenty-somethings worldwide.

You see, in a nutshell, the "Modus operandi" of the corporate raider of the 1980's was three-fold:

• Scare the holy shit out of company management and the board of directors with the threat of a takeover so that they paid the raider to go away

(This practice was commonly called "greenmail" because it was really akin to blackmail, but more white collar and genteel.)

• Second, if corporate management didn't give in to green mail, the raider might actually take over the company and either manage it or break it into smaller pieces and sell it off for a fast profit

• Third, even if the Corporate Raider didn't get the company, he would have likely driven up the stock price and forced management to make some changes

Either way it went, they usually seemed to make mucho dineros.

But Which Financial Tycoon Provided The Money For Those Deals?

Well money sure wasn't growing on a bush in the corner of the corporate raider's beautiful country estates.

"Look dear, the bushes are sprouting money everywhere! Now I have enough cash to buy NBC."

Financing came from Wall Street investment banking firms like Goldman Sachs, Morgan Stanley, Lehman Brothers ... etc, all names you'll need to know for your future IPO.

And, in the 1980s, no financier on Wall Street was bigger than Financial Tycoon Michael Milken.

He ran the high-yield bond trading group at investment banking firm Drexel Burnham Lambert.

Just the name alone makes me want to heat up a pot of tea, light up a cigar, and snack on some crumpets.

Anyway, Milken did 3 things that were compelling:

• Pissed off the establishment of corporate executives, many of whom were overpaid stewards that lacked entrepreneurial flair

• Put the fear of God into these same bumpkins that they might "lose their jobs"

• Used a financial instrument called the "high-yield bond" or "junk bond" to raise money for corporate raiders and ... entrepreneurs too.

In the 1980s, the venture capital community was not what it is today. So junk bonds were akin to "venture debt".

And I'm all for learning about new financial instruments for entrepreneurs.

The End

Milken's Wall Street career didn't end well. The 1980s was fraught with Wall Street scandals. And he was the biggest fish caught up in the criminal net. Though there is debate as to just how serious a criminal he really was.

One year he made over $500,000,000. Now that's criminal!

But the Financial Tycoon pleaded to some charges and was barred from Wall Street for life.

Junk bond financing still exists though.

So, if you're seeking outside financing of any kind (Angel financing, venture financing ... etc) it can't hurt to peek at all options ... right?

To learn about other potential financial and business tycoons, Listen to The Looney Executive Mid-Atlantic Emerging Growth Series