Many financial firms, from Goldman Sachs to Bain Capital, like to groom their senior talent from within. But the Carlyle Group, a private equity giant based in Washington, has shown time and again that it is willing to look elsewhere for its leaders.
The most prominent example yet came on Tuesday, when Carlyle announced that Michael J. Cavanagh, one of the co-leaders of JPMorgan Chase’s huge investment bank, would join the firm as its co-president. In the newly created role, Mr. Cavanagh, 48, will share responsibilities with Glenn A. Youngkin, 47, an insider who has spent nearly two decades at Carlyle.
With Mr. Cavanagh joining the highest ranks of the private equity firm, an outsider is now in line to possibly take over one day from the firm’s three founders, who are well into their 60s.
The founders — David M. Rubenstein, William E. Conway Jr. and Daniel A. D’Aniello — are not planning on stepping down any time soon. And certainly, other Wall Street titans like Carl C. Icahn and Warren E. Buffett are still going strong in their 70s and 80s.
But Mr. Cavanagh and Mr. Youngkin, who is currently the chief operating officer, are now in the catbird seat at Carlyle. As co-presidents and co-chief operating officers, their day-to-day responsibilities will be defined broadly, overseeing operations and the development of new products, along with helping to manage the funds and deal with investors.
“Coupling a highly successful senior financial services executive with a proven Carlyle leader possessing deep institutional knowledge will help ensure that Carlyle continues to innovate and grow for another quarter-century,” Mr. Rubenstein and Mr. Conway said in a statement on Tuesday. “Mike’s arrival combined with the well-deserved promotion for Glenn provides Carlyle with the incredible opportunity to enable fresh perspectives in an environment that embraces change.”
Carlyle worked with an executive search firm in a six-month process in which it considered more than 75 names for one of the co-president posts, a person briefed on the matter said. Before Mr. Cavanagh’s name was floated, he was not widely known inside Carlyle.
But during talks this year, Mr. Cavanagh got to know the founders and spent time with Mr. Youngkin, to make sure the two would be compatible.
One attraction of private equity is the potential to earn vastly larger sums than are available in banking. Carlyle’s three founders together made about $750 million in 2013, including dividends and profits from investing in Carlyle’s funds. Mr. Youngkin, who owns a smaller stake in the firm, made a total of $56 million — a princely sum by any standard. Carlyle is expected to report information about Mr. Cavanagh’s compensation in the coming days. His pay at JPMorgan Chase was not made public.
Mr. Cavanagh joins other senior leaders who went to Carlyle from various corners of Wall Street.
Adena T. Friedman, the chief financial officer, joined Carlyle in 2011 as it was preparing to go public. She had formerly held the same title at the Nasdaq OMX Group, and was valued for her experience at a prominent public company.
Michael J. Petrick, the head of global market strategies at Carlyle — a business that includes credit, hedge funds and other investment strategies — joined the firm in 2010 after a 20-year career at Morgan Stanley, where he was the head of institutional sales and trading.
Another Morgan Stanley executive, Jacques P. Chappuis, joined Carlyle last year to run its so-called solutions business, a platform that invests in other funds. At Morgan Stanley, he had run the fund-of-funds business.
In each of these cases, Carlyle has brought in an experienced manager to help the firm expand beyond its core business of private equity. But in that business, too, Carlyle has sometimes hired outside talent.
The No. 2 executive in its buyouts business, Kewsong Lee, was hired last fall after 21 years at a rival private equity firm, Warburg Pincus, where he served in prominent investment roles. Mr. Lee, the deputy chief investment officer in the private equity group, reports to Mr. Conway.