Michael Milken is a prominent financier and philanthropist, commonly referred to as the “Junk Bond King” for his innovative use of high-yield bonds in the 1980s. His work at Drexel Burnham Lambert revolutionized corporate finance, allowing companies with lower credit ratings to access capital through junk bonds. Beyond his financial career, Milken is also a significant philanthropist, having founded the Milken Institute, a non-profit think tank focused on economic and public policy research.
Early Life and Education
Michael Milken was born on July 4, 1946, in Encino, California. He pursued higher education at the University of California, Berkeley, where he earned a Bachelor of Science degree. He later attended the Wharton School at the University of Pennsylvania, receiving an MBA, where he was influenced by the teachings of finance professor Ralph Gomory.
Career at Drexel Burnham Lambert
Introduction to Junk Bonds
Milken’s career took a significant turn when he joined Drexel Burnham Lambert in 1969. Here, he began to focus on high-yield bonds, otherwise known as “junk bonds,” which are bonds with a lower credit rating but higher yield. Milken saw an opportunity to provide capital to companies traditionally shunned by the conventional bond market.
Milken’s Strategies and Impact
Milken’s strategies involved rigorous research and an understanding of the market’s behavioral aspects. By providing financing to companies that otherwise couldn’t secure loans, he facilitated mergers, acquisitions, and leveraged buyouts, which reshaped the business landscape. His work contributed significantly to the evolution of modern corporate finance.
Legal Issues and Conviction
In the late 1980s, Milken faced legal issues related to securities and tax violations. In 1990, he pled guilty to multiple charges, including securities fraud, for which he served time in prison and paid substantial fines. Despite this, Milken’s contributions to the financial world and subsequent philanthropic efforts remain influential.
The Milken Institute
Founding and Mission
After serving his sentence, Milken redirected his efforts towards philanthropy, founding the Milken Institute in 1991. The Institute aims to improve global prosperity by advancing collaborative solutions that widen access to capital, create jobs, and improve health.
Research and Impact
The Milken Institute is involved in various sectors, including public health, medical research, and finance. It hosts the annual Milken Institute Global Conference, which gathers thought leaders to discuss significant global issues.
Philanthropic Endeavors
Milken’s philanthropic efforts extend beyond the Institute. He has donated millions towards education, medical research, and public health initiatives. His significant contributions to cancer research and awareness have earned him recognition in the medical community.
Conclusion
Michael Milken’s legacy is dual-faceted; he will be remembered for his groundbreaking work in the financial sector as well as his significant philanthropic contributions. Despite the legal controversies, his innovations in high-yield bonds have left a lasting impact on corporate finance, and his ongoing philanthropic work continues to contribute to societal advancements.
References
- “Michael Milken | Milken Institute.” Milken Institute, [website link].
- “The Man Who Changed Wall Street: Michael Milken and the Conquest of Corporate America” by Daniel Gross.
- “King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone” by David Carey and John E. Morris.
