Dealmaker Steven Klinsky had a front-row seat to the most operatic takeover drama Wall Street has ever seen, the knives-out multibillion-dollar battle for control of RJR Nabisco.

From that 1980s contest he learned a formative lesson: stay far away from the highly leveraged takeovers orchestrated by swashbuckling debt junkies. The results have been a quiet success.

His New Mountain Capital has focused on building up mid-sized companies in predictable industries using modest amounts of debt. Returns have been robust and investors are rewarding the results, with the New York-based group raising $15.4bn for its seventh buyout fund, exceeding a $12bn target set last year — and bucking a recent trend of poor industry-wide fundraising.

New Mountain joins private equity groups such as CVC Capital Partners, Clayton, Dubilier & Rice, Warburg Pincus and EQT that have exceeded their fund targets at a time when many rivals have fallen short of their goals.

It is part of a rare successful streak of the past few years among buyout groups that steered away from pursuing peak-valuation deals during the frenzied markets of 2021 and instead consistently returned cash to investors.

“I preach against the old private equity model of 40 years ago where people think you borrow as much as you can, go play golf, and see if it all worked out in five years,” Klinsky said in an interview with the Financial Times.

The group is known for its ability to build small businesses in sectors including healthcare services, software and manufacturing into industry leaders by pushing their products into new markets, or by identifying acquisitions.

“New Mountain’s judicious use of leverage and its focus on building businesses in faster-growing parts of the economy have insulated the firm from the brunt of the Federal Reserve’s interest rate hikes,” said Maxwell Snyder, vice-president of alternatives at NewEdge Wealth, an investor in its funds.

Fundraising for the private equity industry slowed dramatically in 2022 when interest rates rose quickly and public stock valuations fell, causing large investors to become overexposed to private assets and pull back from investing in new funds.

The industry’s challenges have been exacerbated by a slowdown in dealmaking and initial public offering activity that has made it hard for PE groups to exit their investments even as public markets reach new highs. In 2023, buyout firms distributed the lowest amount of cash versus what they called from investors since the 2008 financial crisis, according to Bain & Co.

New Mountain, however, has returned more capital than it has invested in recent years. Since January 2021, the firm has sold more than 20 companies, returning well over $10bn in cash to its investors because of successful deals such as Signify Health, a healthcare IT company.

Its 2017-era buyout fund returned 1.16 times what investors had committed by the end of 2023, making it the rare fund from that year to have returned a surplus of cash to investors, according to documents published by public pension funds. When including the fund’s remaining unsold investments, it has generated a 2.4 times gain.

New Mountain’s assets under management have more than doubled to $55bn since 2018, when Klinsky sold a minority stake in the group to Blackstone that cemented his billionaire status. The investment allowed him and his partners to invest $1.4bn into their new fund. It has also given them the financial heft to remain private and resist seeking a tie-up with a larger asset manager, Klinsky added.

As a partner in his early 30s at Forstmann Little, an early pioneer of the $4tn private equity industry, Klinsky became a top lieutenant to Ted Forstmann as the prolific financier studied a bid for RJR Nabisco. It was the seminal deal of the go-go 1980s, later chronicled in the book Barbarians at the Gate.

Klinsky had a memorable bit part in the saga.

Ross Johnson, the chief executive of RJR, had approached Forstmann about teaming up as a “white knight” to counter a takeover effort led by KKR. After hearing Johnson’s pitch, Forstmann consulted Klinsky, a trusted number cruncher, to see whether it was workable. “I think he’s totally insane,” Klinsky is quoted as saying in the book.

Forstmann never bid on RJR, which was sold to KKR for $29bn, but quickly became an emblem of the private equity industry’s hubris as it struggled under the crippling weight of its takeover debt.

When he left Forstmann Little in 1999 to create his own private equity outfit, Klinsky decided on a different approach.

Many of the companies New Mountain buys are family-owned businesses that have never made an acquisition or built operations outside of the US. In many deals, New Mountain forges novel corporate strategies.

The style has helped the firm earn large windfalls at a time when many rivals are contending with an industry reckoning.

In 2017 New Mountain made a push into so-called “value-added care”, with companies focused on preventive health measures to lower costs. It acquired and merged two small companies in the sector for less than $500mn and renamed the group Signify Health. Last year, New Mountain sold the company to CVS for $8bn.

It also had success in technology investments. Klinsky’s firm acquired a small logistics software company called RedPrairie in 2010 for $550mn. Under new management, the company plotted acquisitions and built artificial intelligence tools that propelled it into a leader in identifying supply chain bottlenecks. In 2021, it sold the rebranded company, Blue Yonder, to Panasonic for $8bn, generating more than $5bn for its investors and employees at the company.

Another big windfall has been Avantor, a pharmaceutical chemicals company that New Mountain acquired from Mallinckrodt for less than $300mn in 2010. Klinsky’s firm pushed Avantor into specialised chemicals that earn higher margins. In 2019, it listed Avantor, which now trades at a $15bn valuation. New Mountain has earned gains exceeding $3bn, according to the FT’s calculations.

Klinsky said he prefers investing in these midsized companies partially because they offer many more growth opportunities for his 200-plus dealmakers and consultants to pursue.

“[A] $500mn company could be a leader in an important niche industry, but there are so many things that the management hasn’t done yet . . . If you are a $10bn company, you probably have done almost everything smart there is to do,” he said. Such businesses are easier to sell to corporate buyers and other buyout firms, he added.

Though private equity is under pressure from the slowdown in dealmaking, Klinsky does not see a coming industry washout. He said the sector has become more professional with less-cavalier capital structures.

“I don’t see a hard landing or crisis in private equity,” he said. “The companies are much less leveraged than they were in the old days. In 1981, a buyout had 19 parts debt and just one part equity. So people threw away the keys on bad deals.”

WELLFLEET, Mass. — Animal rescuers were trying to keep dozens of dolphins away from shallow waters around Cape Cod on Saturday after 125 of the creatures stranded themselves a day earlier.

Teams in Massachusetts found one group of 10 Atlantic white-sided dolphins swimming in a dangerously shallow area at dawn on Saturday, and managed to herd them out into deeper water, said the International Fund for Animal Welfare.

Scouts also found a second group of 25 dolphins swimming close to the shore near Eastham, the organization said, with herding efforts there ongoing as the tide dropped throughout the morning.

Ten dolphins died during the stranding Friday at The Gut — or Great Island — in Wellfleet, at the Herring River.

The organization said it was the largest mass-stranding it had dealt with on the Cape during its 26-year history in the area. The Gut is the site of frequent strandings, which experts believe is due in part to its hook-like shape and extreme tidal fluctuations.

Misty Niemeyer, the organization’s stranding coordinator, said rescuers faced many challenges Friday including difficult mud conditions and the dolphins being spread out over a large area.

“It was a 12-hour exhausting response in the unrelenting sun, but the team was able to overcome the various challenges and give the dolphins their best chance at survival,” Niemeyer said in a statement.

The team started out on foot, herding the creatures into deeper waters and then used three small boats equipped with underwater pingers, according to the organization.

Those helping with the rescue effort include more than 25 staff from the organization and 100 trained volunteers. The group also had the support of Whale and Dolphin Conservation, the Center for Coastal Studies, AmeriCorps of Cape Cod and the New England Aquarium.

Joe Biden and top allies have sought to reassure Democratic donors that he can defeat Donald Trump, after a disastrous debate performance left wealthy backers divided over whether the US president should abandon his re-election bid.

Biden conceded that he “didn’t have a great night” as he met donors at a fundraiser in East Hampton, New York, on Saturday, where the cost of entry ranged from $3,300 to $250,000 per person, according to the invitation.

“I understand the concern about the debate. I get it,” Biden told supporters in the wealthy resort town.

But the president argued that “voters had a different reaction,” adding: “Since the debate, the polls show a little movement, moved us up actually.”

Few polls have been released since Thursday night’s debate, but betting markets moved dramatically against Biden during and after the showdown. A Morning Consult poll conducted on Friday found roughly half of Democratic voters said Biden should step aside in favour of another candidate.

Three donors familiar with the East Hampton fundraiser described the mood in the room as subdued, despite the president appearing stronger than he did on the debate stage on Thursday night.

Biden was expected to attend another fundraiser later on Saturday in Red Bank, New Jersey, hosted by the state’s Democratic governor, Phil Murphy.

Senior Democratic lawmakers and party grandees have also reached out to donors in recent days. Chuck Schumer, the most senior Democrat on Capitol Hill, has tried to reassure several backers about Biden’s candidacy since the debate, said two party fundraisers.

There have been mounting calls for the president to step aside and allow another Democrat to be the party’s nominee for the White House ahead of November’s election.

At 81 years old, Biden has faced questions for months about his age and fitness for office. But any concerns that Democratic insiders had privately about the incumbent president spilled out into the open on Thursday night, after nearly 50mn Americans watched Biden struggle through a live, televised debate against Trump. The president rambled, appeared to lose his train of thought and struggled to complete sentences.

Biden has insisted that he will stay in the race, and campaign officials say he will participate in a second presidential debate planned for September.

The campaign has touted what it says has been a record influx of grassroots, or small-dollar, donations, since Thursday. A campaign official said on Saturday morning that the campaign had raised more than $27mn between the debate and Friday evening.

“It wasn’t his greatest debate. But it is 90 minutes . . . in a campaign and in an administration, where he has achieved enormous things,” Anita Dunn, a longtime senior adviser to Biden, said on MSNBC on Saturday. “Maybe it wasn’t a great debate. But he has been a great president.”

Asked if Biden’s inner circle had discussed him dropping out after the debate, Dunn replied: “No, the conversation we had is, ‘OK, what do we do next?”

Jen O’Malley Dillon, chair of the Biden campaign, accused the “beltway class” of “counting Joe Biden out”.

“If we do see changes in polling in the coming weeks, it will not be the first time that overblown media narratives have driven temporary dips in the polls,” O’Malley Dillon said.

But the White House assurances have done little to quell public unease. Late Friday, the influential New York Times editorial board published a leader urging Biden to step aside.

On Saturday in East Hampton, reporters travelling with the president saw a group of onlookers holding signs that read: “Please drop out for US,” and “Step down for democracy,” and: “We love you but it’s time.”

The debate fallout has divided Democratic donors, whose support is critical to fund a campaign that is set to spend hundreds of millions of dollars in an effort to secure another four years in the White House. Biden’s long fundraising advantage over Trump has eroded in recent months. Trump outraised Biden in both April and May amid a swell of support following his conviction on 34 criminal charges in New York last month.

While some donors have redoubled their efforts to rally people around Biden, others are more skittish. One Democratic fundraiser noted some Wall Street megadonors intend to keep bankrolling the Biden campaign while trying to convince him to make way for another candidate. Another camp intends to withhold their donations altogether.

Still, several high-profile Democratic donors have come to Biden’s full-throated defence.

LinkedIn founder and billionaire Democratic donor Reid Hoffman sought to calm fellow deep-pocketed Biden supporters in a letter on Friday in which he acknowledged that the president had a “very bad debate performance”. But he added that it would be a ‘bad idea” to launch a public campaign to get him to step aside.

“This election is very close, and I don’t know who will win,” Hoffman wrote. “But as a political philanthropist, with 129 days until the election, I am doubling down on my bet that America will choose Biden’s decency, care, and proven success over Trump’s violence, lies, and chaos.”

Trump narrowly leads Biden in national opinion polls, according to the latest FiveThirtyEight average, as well as in most of the key swing states that will decide the outcome of November’s election.

One Democratic fundraiser said donors would be looking at polling in the coming days to plot their next move.

Several are already contemplating who they would throw their weight behind if Biden were to step aside, with Michigan governor Gretchen Whitmer among the most popular names being floated. Three donors and bundlers also said Democratic House minority leader Hakeem Jeffries was gaining interest from Wall Street elites.

“The results of those polls will help donors decide what to do next . . . if the result is negative there will be consequences,” the fundraiser said.

But the Biden campaign showed little outward signs of concern about the polls at the weekend.

Geoff Garin, president of Hart Research and a pollster for the Biden campaign, said in a post on X Saturday evening that two surveys he had conducted in battleground states following the debate showed it had “no effect on the vote choice”.

“The election was extremely close and competitive before the debate, and it is still extremely close and competitive today,” Garin said.

Additional reporting by Alex Rogers in Washington