It's a long way from running Gruntal & Co. LLC, a brokerage dubbed "the shabby side of the Street" by Fortune magazine, to building an investment bank with 1980s merger maven Eric Gleacher. But that's the journey traveled by Lee Fensterstock, 60, now CEO of Broadpoint Securities Group Inc., which in early March agreed to buy Gleacher Partners LLC for $68 million in cash and stock. Fensterstock will be CEO of the new Broadpoint Gleacher, while Gleacher will be the firm's chairman.

A former head of institutional sales and trading at PaineWebber Inc., Fensterstock met Gleacher in 1994, when the M&A banker advised PaineWebber on its acquisition of Kidder, Peabody & Co. from General Electric Co. Two years later, Fensterstock was running Gruntal, a regional brokerage firm reeling from a series of management scandals. Fensterstock tried to sell the ailing firm to Questor Management Co. LLC, a private equity investor that was home to another alum of the Kidder Peabody-PaineWebber marriage, Michael Madden. But the deal fell through and Fensterstock packed his bags.

Next for Fensterstock was his own shop, Bonds Direct Securities LLC, which he sold to Jefferies & Co. in 2004. That led to a three-year stint as co-head of fixed income at Jefferies. In 2007, MatlinPatterson Global Advisers LLC came calling. The distressed investor was recapitalizing First Albany Cos., a small middle-market firm, via a $50 million equity investment, and tapped Fensterstock to run it. MatlinPatterson rechristened the firm Broadpoint and relocated it to New York.

Through it all, Fensterstock never lost touch with Gleacher, 68, who launched his own advisory shop in 1990 after running M&A at Lehman Brothers Inc. and Morgan Stanley. Gleacher sold his firm in 1995 to NatWest for $135 million -- nearly twice what Broadpoint is paying -- and reportedly pocketed $50 million for himself. He bought Gleacher & Co. back four years later after the British bank had a change of heart about competing in U.S. investment banking.

In recent years, Gleacher has advised General Dynamics Corp. on its $2.2 billion acquisition of Jet Aviation, and Hexion Specialty Chemicals Inc. in its $10 billion bid for Huntsman Corp. And he kept up with Fensterstock. "Two or three years ago, Lee and I started talking about what he wanted to do in this business, and it involved him taking control of First Albany, which he has transformed," Gleacher said on a conference call announcing the deal. Fensterstock has added a fixed-income business from Bank of New York Mellon Corp. through a deal brokered by Gleacher as well as research shop American Technology Research and has hired 167 people (while firing 162). "I did some things with him and understood the concept and talked with him a great deal," Gleacher said.

Those conversations changed once Lehman Brothers Holdings Inc. imploded. "It got to a point where it was clear to Lee and to me that there was a bigger opportunity there than each of us had been looking at," Gleacher said. And that was to partner up and build an investment bank to fill the void created by the tumultuous events of the last few months. "When the economy gets going again, investment banks are going to be an important part of it," Gleacher said. And, if all goes according to their plan, so will Gleacher and Fensterstock.