Jefferies & Company Inc. forms new Private Equity Group to focus on family-controlled businesses

Business Wire, Jan 31, 1995

LOS ANGELES--(BUSINESS WIRE)--Jan. 31, 1995--Jefferies & Company Inc., the investment banking subsidiary of Jefferies Group Inc. (NASDAQ:JEFG), Tuesday in Los Angeles announced that it has formed a new investing business unit, the Private Equity Group.

The main focus of the Private Equity Group, which is based in Jefferies & Company's San Francisco office, is to make non- controlling, active equity investments in family-controlled businesses.

The new group provides Jefferies & Company and its co-investors an investment opportunity often overlooked by other institutions: the offering of liquidity options and strategic planning resources not generally available to the specialized, family-business market.

Jefferies & Company has named Susan Kelly Barnes and Pascal N. Levensohn as managing directors of the Private Equity Group. The new business will target middle-market, privately held family businesses that are in transition from traditional family management structures to more professional management and less-concentrated forms of equity ownership.

The Family Business Opportunity

According to a number of studies, family businesses account for 50 percent of the nation's gross domestic product and 65 percent of all wages.

During the next decade, an estimated $6.8 trillion of net worth will change hands from one generation to the next, with the peak period of distribution expected between the years 2002 and 2011. Much of this wealth is in the assets of family firms, an estimated $3 trillion to $4 trillion of which, without some form of provident financial planning, will be paid in taxes.

Further, because of a combination of poor financial planning and the unique culture of most family businesses, a significant number of these businesses fail to survive the transition from one generation to the next.

"There is a great need for participation by responsible investors in family businesses," said Steven S. Gal, director of the Family Business Program at the University of Southern California School of Business Administration. "The Jefferies Private Equity Group has identified an important trend in this large and underserved market."

About the Managing Directors

Both Barnes and Levensohn bring experience in the family-business investment market. Prior to joining Jefferies, they worked together for one year and developed a strong network of contacts within this market, assembling an advisory board of financial, industry and family business experts that will continue to work with them at Jefferies.

Prior to their independent work with family businesses, both Barnes and Levensohn worked as managing directors at Richard C. Blum & Associates in San Francisco, a privately held merchant banking firm.

Barnes was one of six founders, along with Steven P. Jobs of NeXT Computer Inc., where she was the chief financial officer from 1985 to 1991. From 1981 to 1985, Barnes worked at Apple Computer Inc., where she was the divisional controller of the Macintosh division. She is a graduate of Bryn Mawr College and holds an MBA from the Wharton School at the University of Pennsylvania.

Levensohn, a graduate of Harvard College, was a risk arbitrageur in New York from 1983 to 1990, principally at the First Boston Corp. and at Progressive Partners Limited Partnership. Levensohn began his professional career at Bankers Trust Co. in New York.

About Jefferies Group Inc.

Founded in 1962 and based in Los Angeles, Jefferies Group is a publicly traded holding company with 14 offices in the United States and overseas. Its two primary subsidiaries are:

-- Jefferies & Company Inc., a securities brokerage business in equity and taxable fixed-income securities, provides trade execution and investment banking services to 1,700 institutional investors around the world on a daily basis.

-- Investment Technology Group Inc. (NASDAQ:ITGI). This company provides computerized trading systems and software programs to professional investors and is 81-percent owned by Jefferies Group.

In addition, the firm has industry-focused specialty finance/ research groups through its New Orleans-based Energy Group and the Gaming, Interactive and Entertainment Group based in San Francisco. In 1994, the company reported revenues of $316 million and net income of $20.2 million.

CONTACT: Jefferies & Company Inc.

David F. Eisner, 212/903-2390

Pascal N. Levensohn, 415/399-4404