Meet Michael Lynch, personal banker.
(GS - Get Report)
investment banker scored quite a coup when the
board decided to put itself up for sale last year.
Reader's Digest didn't just retain Lynch's former employer to find a buyer for the publishing company. In a highly unusual move, it also hired Lynch to hold its hand in the sale process.
Now Lynch stands to pocket a $2.75 million advisory fee, assuming Reader's Digest shareholders approve a proposed $1.6 billion buyout by private equity investors led by Ripplewood Holdings and
. That fee comes on top of the $11 million fee being raked in by Goldman Sachs.
But Lynch clearly is getting the better end of the deal. While his former Goldman Sachs colleagues will have to wait until the end of 2007 to divvy up their bonus pool, Lynch is due to get his big fee at closing, which is expected as early as next month.
Better yet, he doesn't have to share his winnings with his current employers at GSC Group, say people familiar with the buyout. The $12 billion New Jersey-based investment firm, which employs Lynch as a managing director, hasn't asked for a split of Lynch's fee.
Reader's Digest, in a recent regulatory filing, says it retained Lynch because the banker had been the company's "relationship partner" at Goldman Sachs for many years. A person familiar with the situation says the Reader's Digest board felt Lynch knew the company better than any of the Goldman Sachs partners working with it in the buyout negotiations. Lynch retired from Goldman Sachs in 2005 before joining GSC as an executive this past June.