Giuliani's Firm Sells Investment Business

Rudolph W. Giuliani, right, talks with California Gov. Arnold Schwarzenegger while campaigning near Los Angeles. Reporters asked Giuliani questions about a reported strain in relations  between his wife and his son.
Rudolph W. Giuliani, right, talks with California Gov. Arnold Schwarzenegger while campaigning near Los Angeles. Reporters asked Giuliani questions about a reported strain in relations between his wife and his son. (By Mark Avery -- Associated Press)
By Matthew Mosk and Michael D. Shear
Washington Post Staff Writers
Tuesday, March 6, 2007

Rudolph W. Giuliani's consulting firm sold its multimillion-dollar investment banking component yesterday in a move intended to free him to concentrate on his presidential bid, even as the former New York mayor was confronting some of the campaign season's first scrutiny of his personal life.

Campaigning in California, the Republican asked reporters to keep out of his private life after they quizzed him about the strained relationship between his college-age son, Andrew, and Giuliani's third wife, Judith Nathan.

The sale of the investment banking business offered a rare glimpse into the complex financial enterprise that Giuliani helped create after leaving the mayor's office in 2001.

An Australian-based firm bought Giuliani Capital Advisors LLC for an undisclosed amount. A source close to the Republican candidate who spoke on condition of anonymity said the sale is intended to free Giuliani from distractions as he pursues the White House.

"This enables him to sustain his intense focus on his candidacy," the source said.

Others viewed the sale as Giuliani's first step away from the lucrative private-sector career he built during the years he spent outside the public spotlight. Eric Abrahamson, a Columbia Business School professor, said he thinks Giuliani will have little choice but to start building a higher wall between his campaign and his business activities.

"The organization has dealt with all varieties of clients over time, some of whom would expose his image to certain perception problems," Abrahamson said yesterday. "I would imagine that, fairly soon, he would have to completely distance himself from the business."

Giuliani has held sizable leads in several independent polls and has tried to frame his campaign for the Republican nomination around the image of strength he built after the attacks of Sept. 11, 2001.

His multifaceted consulting firm, Giuliani Partners, primarily advises security companies and promotes their products, many of which have been marketed to federal agencies. That proved problematic for one of Giuliani's early business partners, Bernard B. Kerik, a former New York police commissioner who withdrew as President Bush's nominee for Homeland Security secretary after potential conflicts were exposed.

The 100-member banking outfit that Giuliani sold to the Macquarie Group yesterday specialized in helping companies restructure after bankruptcy. Giuliani Partners bought the boutique investment firm from accounting giant Ernst & Young in 2004 for $9.8 million.

Since then, the company has had tepid earnings, according to Jennifer Payne, an industry analyst with SNL Financial. In 2005, the company's federal filings show it took in $47.8 million in revenue, but its net income showed a loss of $1.4 million, she said. The parties involved declined to provide financial details of the sale.

Giuliani is also a partner in a Texas law firm and has maintained a lucrative public speaking career.

As a candidate, he will be required to reveal only broad information about his business relationships on personal financial statements that he will be asked to provide to federal elections regulators by May 31.

Shortly after he announced the sale of his investment firm, Giuliani faced reporters in Southern California and took responsibility for what he called a strained relationship between his son, Andrew, and Nathan.

"I believe that these problems with blended families, you know, are challenges," he said. "The more privacy I can have for my family, the better we are going to be able to deal with all these difficulties."

Giuliani's bitter and messy divorce from his second wife, Donna Hanover, produced headlines for months, as did his courtship of Nathan, his longtime companion. Giuliani's first marriage, to a second cousin, was annulled after a little more than a year.

In the New York Times last weekend, Andrew Giuliani, 21, said that he and his father had resumed speaking after "a decent period of time." He added that "there's obviously a little problem that exists between me and his wife."

Researcher Richard S. Drezen contributed to this report.

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