Deal-Making Blueprint: Jordan Bleznick on Carl Icahn's Creative Tax Strategies

Early Career and Path to Icahn

• 💡 Jordan Bleznick, a University of Cincinnati alumnus, pursued an LLM in tax at NYU in 1980, driven by his problem-solving skills and aptitude for numbers.
• 🎯 He began his career in Columbus, Ohio, before moving to New York in the early 1980s, eventually joining a mid-sized law firm in 1984.
• 🔑 Bleznick became Carl Icahn's primary client through his firm, working on Icahn's deals from 1984 until 2023, eventually transitioning to an in-house role as General Tax Counsel.

Carl Icahn's Activist Investing

• 📈 Carl Icahn, often labeled a "corporate raider," is better described as an activist investor who sought out undervalued companies by analyzing public filings like 10Ks.
• ⚖️ His approach involved accumulating stock, identifying company flaws, and initiating proxy fights to gain board representation, often leading to buyouts in his early career.
• 📜 The introduction of the greenmail excise tax in the 1980s, preventing buyouts on terms better than other shareholders, influenced his evolution towards long-term activist strategies.

Unique Financial and Tax Strategies

• 💰 Icahn's methodology involved using his holding company to borrow billions of dollars and leveraging his securities to maintain a substantial cash reserve, enabling him to act on opportunities.
• 📊 He developed his own metric, "Carl cash flow," defined as EBITDA minus maintenance capex, to assess a company's core value, particularly favoring value-oriented companies.
• ✅ Tax planning was an indispensable component of Icahn's strategy, with Bleznick focusing on identifying and utilizing tax assets like net operating losses that others often overlooked.

Working with Carl Icahn

• 🤝 Jordan Bleznick's decision to go in-house with Icahn was contingent on reporting directly to Carl to ensure his tax-driven deal structures were not undermined by other executives.
• 💬 Carl Icahn was described as 90% entertaining but could be relentlessly critical if displeased, showing no tolerance for what he called "country club types" in management.
• 👨‍👩‍👧‍👦 Bleznick also negotiated specific conditions, such as leaving early on Wednesdays and Fridays to have dinner with his sons, which Icahn surprisingly agreed to.

The "Icahn Lift" and Target Selection

• 🚀 The "Icahn Lift" refers to the phenomenon where a target company's stock price would typically increase by 5-10% upon Icahn's public disclosure of his stake, even before any action was taken.
• 🔍 Icahn and his team primarily relied on public information and SEC filings to identify companies, though his notoriety often led people to approach him with insights.
• 🎯 He targeted conglomerates with perceived "mental management" layers, often advocating for the sale of non-core businesses to repay debt and streamline operations, as seen with American Car and Foundry (ACF).
• ⚠️ Regulatory changes like Reg FD and Sarbanes-Oxley significantly impacted the landscape of information disclosure and corporate governance, affecting how Icahn operated.