Continuing a collaboration that began 10 years ago, Jeff Hammer and Paul Sanabria are joining investment bank Houlihan, Lokey, Howard & Zukin Inc. to set up an advisory effort serving the secondary market for private equity investments. They're aiming to help private equity limited partners, be they pension funds, endowments or insurance companies, restructure their businesses and value their investments.

"The limited partner community has been under-investment-banked," says Hammer, noting that LPs need help considering secondary sales as they juggle their allocations in alternative investments with their own mounting obligations amid the economic crisis. "You would never have seen Harvard, Duke, Columbia and [University of] Virginia publicly say in so short a period of time that they're willing to sell" their private equity stakes, though that is what the university endowment funds are now considering as they look to reduce their illiquid holdings.

"This is going to be the theme for the next two to three years," Sanabria adds.

Hammer, 46, and Sanabria, 45, met at Harvard Business School some 20 years ago. They began working together in 1999, when they formed BDC Financing Inc., a business that provided investment management and advisory services to institutional and high-net-worth investors in private equity. Before that, Sanabria had been an engineer at Hewlett-Packard Co. and Aerojet General Corp., while Hammer had founded Gotham Investment Group, a real estate investment trust capitalized by Nomura Securities International Inc. and Commonwealth Property Investors LLC.

Hammer and Sanabria sold BDC Financing to Bear Stearns Asset Management Inc. in 2004 and worked there, first running the its fund-of-funds business and eventually taking over the private funds group, which raised money for private equity firms and helped them with secondary sales. That's what they were doing when Bear Stearns Cos. went bust in 2008 and was purchased by J.P. Morgan Chase & Co. They remained at J.P. Morgan until the end of the year.

Joining Houlihan in New York seemed natural because the middle-market-focused investment bank already has large restructuring and valuation practices, and both services are in demand by LPs who want to restructure their holdings but find it difficult to value investments that are not actively traded.

The bankers will report to Bob Hotz and Scott Adelson, global co-heads of investment banking at Houlihan.