Bruce S. Goldstein and Brian D. Kaufman, best friends and colleagues at Keefe, Bruyette & Woods Inc., thought they had lost each other on 9/11.
Mr. Goldstein, 42, a senior vice president of Keefe Bruyette’s private equity sales group, was in his office on the 88th floor of the World Trade Center’s south tower when a plane sliced through the north tower. He shuttled down an elevator just before the second plane slammed into his building.
Mr. Kaufman, 40, was a senior vice president at Keefe Bruyette and founded and headed its financial strategies team. He had returned to full-time work just two weeks before the attacks after battling leukemia. That morning, he recalls, he would have been in his 89th-floor office had he not lingered at home to play with one of his four young sons.
The two men assumed the other had not made it out alive, but they connected by phone hours after the towers collapsed. In that conversation and in subsequent days they made a pact to leave Wall Street for new work closer to home in New Jersey.
Surviving a catastrophe that killed 67 Keefe Bruyette employees “made me realize that I needed to rebalance my work versus family time,” said Mr. Goldstein, the father of three. He never returned to Keefe Bruyette.
“It was a difficult decision … because I had been here for over five years and really respected what they did and how they did it,” he said. “But for my own peace of mind, I realized that I needed to make a change.”
Mr. Kaufman returned to Keefe Bruyette but did not stay long. An experience like 9/11 “evokes some major soul-searching,” he said.
The men spent October and November putting together a business plan, and by the end of the year they had joined forces with Eugene S. Weil, a co-founder and managing director of Milestone Merchant Partners, a Washington-based merchant bank with investment banking and private equity capabilities.
Milestone’s specialties include advising banks on building their deposit bases as well as on borrowing more efficiently and raising capital. The firm, which has about 25 employees and counting, also focuses on consumer and commercial specialty finance, insurance and asset management, and mergers and acquisitions.
Mr. Kaufman and Mr. Goldstein, now two of the firm’s six managing directors, opened a Milestone office in Short Hills, N.J., near their homes. They started the firm’s balance-sheet strategy operation, which is part of Milestone Advisors LLC, the holding company’s broker-dealer arm. Essentially they are doing what Keefe Bruyette does: targeting small and midsize banking companies (those with assets of $200 million to $15 billion). But their business is purely advisory.
“We’ve chosen to stay impartial by not carrying any inventories of securities,” Mr. Goldstein said. Instead, they are “fostering relationships with those who do carry securities.”
Mr. Weil, who once headed the financial services practice at Friedman Billings Ramsey, said Milestone saw an opportunity as competitors chased business from bigger banks. A “real hole” was developing “in the middle market and smaller end of the spectrum,” Mr. Weil said.
For example, there were banks that did not fit into the pools of trust-preferred securities Wall Street investment banks have been packaging since 2000. This group — including banks that needed transactions done more quickly than the trust-preferred pools allowed, and those that could get a better price for a single issue than as part of a pool — wanted single issues.
Milestone has completed about seven of these single-issue trust-preferred deals, and it plans to expand that business, Mr. Weil said.
The balance-sheet group run by Mr. Goldstein and Mr. Kaufman focuses on helping bank clients manage the liability side, which Mr. Kaufman says is overlooked. Usually, “the amount of attention that is placed on the asset side of the balance sheet is significantly disproportionate to the amount of time on liability management,” he said.
Milestone Advisors offers an array of taxable fixed-income products for clients to use as investments, including “plain vanilla” cash-flow securities such as AAA-rated mortgage-backed securities and short-term collateralized mortgage obligations, Mr. Kaufman said. Milestone also offers federal agency and corporate securities. Citigroup Inc.’s Salomon Smith Barney will be clearing as principal once it gets New York Stock Exchange approval, and Mr. Kaufman said that is expected soon.
Mr. Kaufman and Mr. Goldstein both had worked previously at Sandler O’Neill & Partners LP, another of the World Trade Center tenants devastated by the attacks. Mr. Goldstein had joined Sandler as its fifth employee in 1988 and Mr. Kaufman had joined in 1990.
“When the buildings came down,” Mr. Kaufman said, “I knew that my working in New York had concluded right then and there. I felt like, I’m around for a reason, and probably for a number of good reasons.”
