Main Street Advisors has helped assemble everything from Beats by Dre to Lobos Tequila. Now, the California firm has raised $1.1 billion to make even more celebrity-heavy deals.
Born 25 years ago out of founder Paul Wachter's work advising Arnold Schwarzenegger, Main Street has grown to counsel everyone from LeBron James to Bono to Billie Eilish on how to leverage their success in sports and the arts to build business empires. With the new fund raised from some of those same stars as well as institutional investors, it's aiming for a larger role in those transactions.
Companies with Main Street's fingerprints on them keep making headlines. The firm was instrumental in negotiating Drake's deal with Universal Music Group, an agreement announced last month that reportedly is worth upwards of $400 million. Main Street was an early investor in ATTN:, advising on its creation in 2014 and its sale this year to Candle Media, the Blackstone-backed firm run by former Disney executives Kevin Mayer and Thomas Staggs.
Stars off court and screen already wielded enormous cultural and economic sway -- and cashed in on it -- long before social media influencer became a job description. No longer satisfied to be mere tastemakers and empowered by a more direct rapport with fans, those athletes, musicians and actors are increasingly top investors in their own projects, creating an opportunity for Main Street to join in as a principal.
"Ownership versus endorsement, that's the new normal," Wachter said in an interview. "We've found ways to create businesses around influential people that gives products the authenticity and credibility that they deserve."
The 65-year-old Wachter is a lawyer-turned-banker who was clerking in Los Angeles for a federal judge when he first met Schwarzenegger in the early 1980s. The two were introduced by Schwarzenegger's future brother-in-law, Bobby Shriver, at a party, where Wachter and the future California governor bonded over business and Austrian skiing.
Schwarzenegger, on his way to becoming the biggest action star of the 1980s, repeatedly turned to Wachter for advice as he bought real estate, weighed endorsement deals and aggressively marketed himself and his movies. As Schwarzenegger's businesses grew more complex, he persuaded Wachter to set up his own firm in 1997, with Schwarzenegger as his anchor client -- and landlord. The movie star gave Wachter space in his downtown Santa Monica offices.
"Someone has to guide you through all this," Schwarzenegger said in an interview. "You cannot go and improvise on this, you have to get the proper help. If you're talented in some area and making a lot of money, you have to go and find someone who can help you multiply it."
Wachter and Schwarzenegger sought ways for the star to go a step beyond endorsements and exert influence -- and ultimately earn more money. Just as Schwarzenegger convinced Universal Pictures to send him around the world to market movies like "Conan the Barbarian" in the 1980s, he used the same playbook for Planet Hollywood in the 1990s.
Schwarzenegger, along with Sylvester Stallone, Bruce Willis and Whoopi Goldberg, lent not only their names and memorabilia to the chain, they turned restaurant openings into happenings -- with the glitz and attention of movie premieres.
Armed with a template, Wachter assiduously cultivated a network of like-minded entrepreneurs and stars across music, sports and entertainment. In addition to advising them individually, he sought ways for them to meet each other socially and, ultimately, collaborate. He has built a firm that numbers more than 30 employees spanning wealth management, advising on mergers and acquisitions and direct investing.
All of those businesses inform each other, and once a partnership between a company and client is established, Main Street looks for ways to organically plug other clients into the deal, sometimes as endorsers, and often as co-owners.
"We look at everything from the perspective of 'Do any of our clients add value?' and whether they have an authentic connection to the brand," Wachter said. "We look for ways to supercharge the companies."
Wachter worked with producer Jimmy Iovine and impresario Dr. Dre to create Beats, the headphones and music company that Apple bought in 2014 for $3 billion. Critical to the product's popularity: Beats devices popping up on the head of LeBron James and his USA Basketball teammates. James and his business partner, Maverick Carter, had equity in Beats that earned them millions when Apple bought the company.
"Paul has an eye on culture and what is moving the conversation," Carter said in an interview, noting that Main Street has a penchant for working with first-generation entrepreneurs with a natural affinity for one another. Wachter "opened my eyes to a world that was different than any I've ever known."
For James and Carter, Wachter negotiated the sale of their marketing company, LRMR, to Fenway Sports Group -- Fenway Chairman Tom Werner is a longtime client -- a decade ago. The novel arrangement gave the nascent firm not only access to a bigger sales force, but came with a piece of Fenway's ownership in Liverpool Football Club. That relationship eventually expanded to include ownership for James and Carter in Fenway's crown jewel, the Boston Red Sox.
"Owning is the long-term play," Werner said in an interview. "If you're in it for the long term, that's how it's going to grow. They preferred getting a part of Liverpool, which they rightly believed would provide long-term upside, rather than just taking the quick money."
Wachter also engineered the creation of Lobos, introducing the company's founder to James, Carter and others. Big tequila fans, they agreed to not only endorse, but invest. Wachter then tapped Dia Simms, a long-time lieutenant to Sean 'Diddy' Combs, to become chief executive officer of Lobos.
Lobos has tripled its original revenue forecast and its tequila is now available in 33 states, Simms said in an interview. Its popularity is directly tied to Wachter "pre-curating the incredible group of humans," Simms said. "This is a group that has a legitimate kinship with one another. It's a bit old school."
While Wachter has been able to steer coalitions of investors into deals in the first quarter century of the firm, the new fund gives him the firepower to more easily write checks on their behalf. Among the fund's investors are James, Carter and Schwarzenegger, as well as well-known Wall Street stalwarts such as Apollo Global Management CEO Marc Rowan and RedBird Capital Partners CEO Gerry Cardinale.
The fund comes as valuations sink in a roiling market. The combination of accelerating ambitions and falling prices could lead to new and interesting deals.
Wachter said keeping and adding to Main Street's roster of clients, many of whom are already rich and famous, requires delivering more than a profit.
"It's important to us, and our clients, that we're not just cashing the check to make a buck," he said. "A lot of these things are fun, and it's important that it's fun."