A smooth ride.

• Author: Speizer, Irwin
• Position: Carousel Capital

Carousel Capital's founders didn't have to go round grabbing brass rings. They already had the ticket.

There are three kinds of corporate takeover artists. There's the one portrayed on the big screen, where the suave high roller is swept off his Ferrari by Julia Roberts in hot pants. There's the real thing, the Kohlberg Kravis Roberts sharks with tailored blue suits and bank accounts with notations in billions.

Then there are the newcomers, low-key regional merchant bankers buying and selling companies worth millions instead of billions. The newest is Charlotte-based Carousel Capital, which opened shop this spring with the right connections, ready access to cash and a network of insider-advisers scattered across the Southeast. Though the principals talk about how a home-grown outfit will be a boon to the region, their aim is not so different from their Hollywood counterparts': to make nothing but money. Lots of money.

"Our goal is to grow companies so we can create jobs and create value by taking companies public," founding partner Nelson Schwab III says. That means high profits for investors. To those who come along for the ride, Carousel promises an estimated annual return of 30%. In just two months, it raised $183.5 million for a buyout fund and closed the offering, turning back a hungry line of investors that included some of the biggest banks in New York.

How can a start-up promise those kinds of returns and get that kind of instant, hard-cash response? When the business is making deals, it helps to have someone whose first name is instantly recognizable. In Carousel's case, that is Erskine.

Charlotte investment banker Erskine B. Bowles, most recently a member of President Clinton's White House staff, dreamed up the idea. He brings Carousel name recognition and cachet, from his investment career, government service and rarefied relations. His father, a successful businessman, once ran for governor. His wife is a member of the family that controls the Springs Industries textile empire. His brother-in-law is running against Strom Thurmond in South Carolina for U.S. Senate.

Bowles, 51, conceived the idea of a Charlotte merchant-banking company while working as Clinton's deputy chief of staff and recruited Schwab, who had recently left his job as CEO of Charlotte-based Paramount Parks. When friends heard of his plans, Bowles says, they thought he had lost his gold-plated marbles. "A lot of people didn't believe we could get it done. They thought it would take us a year and a half. We are not year-and-a-half kinds of guys."

Setting out to raise $150 million, Bowles and Schwab quickly collected $183.5 million, which they figure they can leverage into $2 billion of buying power. Their target: taking over 10 to 12 companies valued at between $30 million and $150 million, then reselling each at a profit in a few years.

Sitting on a pile of cash in their richly appointed office suite in an upscale SouthPark office building, the Carousel partners are now being bombarded with offers from companies looking to sell out. "We are having a ball," Schwab says, with a grin. No wonder. Their confidence is shared by the business community, where everybody seems to be betting on Carousel.

"Could they fail? I think the probability is very low," says Tony Plath, director of the Center for Banking Studies at UNC Charlotte. "Certainly they could have a spate of bad deals. But think about the chances of that happening in the Southeast. The economy is strong, the labor market is good, and a lot of companies are moving in. You are doing business in one of the strongest markets in the country."

And there is also the Erskine factor.

"Erskine is a North Carolina fixture," says Richard Cravey, a partner in a rival Atlanta merchant-banking company, Cravey, Green & Whalen Inc., which recently raised $278 million for what Private Equity Analyst...