Carlyle picks Goldman veteran Harvey Schwartz as next CEO

Carlyle Group chose former Goldman Sachs Group Co-President Harvey Schwartz to be its next chief executive as the private equity firm looks to move past a long-running succession challenge.

Washington-based Carlyle announced the appointment Monday. Schwartz, 58, takes over for co-founder Bill Conway, 73, who has been serving as interim CEO since Kewsong Lee resigned in August after a power struggle.
Schwartz will take the reins of a firm that has grappled with management turnover. In recent years, Carlyle pushed to expand in the business of credit and beyond its buyout roots in an attempt to recover ground it had lost to bigger competitors.

The firm has struggled to convince investors about its path to growth, and its shares have underperformed rivals Apollo Global Management and KKR over the past year.

Members of Carlyle’s board, who had been debating whether to tap an external candidate or hire from within, recently considered a shortlist that included credit head Mark Jenkins and private equity investment chief Pete Clare.

In recent months, some directors told associates that Carlyle would benefit from hiring an outsider with a fresh perspective, according to people familiar with the matter. The board unanimously voted to give Schwartz the top job. His appointment is effective Feb. 15.

With Schwartz, Carlyle is gaining a Wall Street veteran best known as a business operator. The board expects him to bring a focus on financial metrics and embark on a review of budgets, while continuing to build on the firm’s push for new sources of revenue, the people said.

He joined Goldman in 1997 as a vice president in its J. Aron currency and commodities trading unit, then run by Lloyd Blankfein. After the 2008 financial crisis, Schwartz steered the bank through new regulations and cost cutting. He climbed the ranks to become finance chief and then co-president and co-chief operating officer, departing in 2018 after David Solomon was chosen over him to succeed Blankfein as CEO.

Carlyle’s decision gives Schwartz a top perch in a corner of finance that’s increasingly challenging the dominance of banks. Goldman, meanwhile, is retrenching and cutting costs after an ill-fated foray into consumer banking and an industrywide slump in dealmaking. Solomon took a roughly 30% pay cut for last year.

Challenging times

Schwartz is stepping in just as the private equity industry is confronting challenging times too. Rising interest rates have put an end to an era of debt-fueled growth and crimped valuations.

Many firms have had to walk back fundraising targets, with pension funds, endowments and other institutional investors overexposed to the asset class. Carlyle’s fundraising for its buyout fund also has gone slower than expected.

Carlyle built its brand as a private equity heavyweight as Conway and fellow founders David Rubenstein, 73, and Daniel A. D’Aniello, 76, parlayed their government connections into deals, wealth and power. They collectively own more than 25% of the stock and continue to wield significant influence in the board room and beyond.

The incoming CEO is likely to face questions about how he will maintain the founders’ confidence while making his own mark on the firm.

Repeated leadership changes have eroded some of its clout.

In 2014, Carlyle brought in Michael Cavanagh from JPMorgan Chase as a potential successor, but he left a year later to join Comcast, where he’s now president. Then Carlyle named Lee and Glenn Youngkin co-CEOs, an experiment that proved short-lived. Youngkin left in 2020 and is now Virginia’s governor.

In his short tenure as sole CEO, Lee sought to aggressively grow Carlyle. Executives worried that the dealmaker-turned-CEO’s decisive manner and the rapid pace of change undermined the firm’s cohesion.
In choosing Schwartz, the board has signaled it is seeking an executive best known for management skills.

Conway told Carlyle employees in a virtual town hall on Monday that he had found the person who was better than himself to lead the firm, according to a person familiar with the matter. Conway said in a separate memo that it was important to give Schwartz and the new chief’s lieutenants the room to remake Carlyle.

“I firmly believe the best thing I can do is let him — supported by the rest of the team — lead the firm and determine the right path to drive the business forward,” Conway said.

— With assistance from David Scheer and Heather Perlberg.