Cerberus Alumni Mold the Pentagon in Their Private Equity Image

Summary

---

Podcast Summary: Cerberus Alumni Mold the Pentagon in Their Private Equity Image

Podcast: Bloomberg Businessweek
Hosts: Carol Massar, Tim Stenovec
Date: July 29, 2026
Guest: Caleb Melby, Bloomberg News Investigative Reporter

---

Episode Overview

This episode delivers a "Big Take" on the intersection of private equity and national defense, zooming in on Cerberus Capital Management’s deepening involvement in Pentagon business. Bloomberg News investigative reporter Caleb Melby joins Carol Massar and Tim Stenovec to unpack how Cerberus—now led in part by Deputy Secretary of Defense Steve Feinberg and fellow firm alumni—is reshaping US military procurement, investment, and strategy using private equity playbooks. The conversation examines Cerberus’s history, its evolving government relationships, high-stakes investments, and the ethical and strategic questions raised by the blending of financial interests with national security policy.

---

Key Discussion Points & Insights

1. Cerberus’s Origins and Ascent in Defense

• Background: Cerberus Capital Management, founded in 1992 by Steve Feinberg, started as a typical private equity and alternative asset manager, only truly pivoting to national security in the 2000s.
  • Quote: “Cerberus has been in this business for a few decades now. And in recent years, basically since the early 2000s, Steve Feinberg, who has a personal interest in national security and defense and spycraft, has really started to push them into investments that contract with the Department of Defense...” – Caleb Melby [02:30]
• Key Investments: Cerberus entered federal defense contractor rankings through ownership of DynCorp, a major US defense services provider, including extensive work in Afghanistan.

2. Private Equity Meets Pentagon: The Cerberus Model

• Traditional Approach: The typical PE formula—acquire, optimize, and sell—has been adapted for defense-related assets.
  • Quote: “...you make an investment, you buy a company, you create efficiencies... and then they sell it. And there's a return. Is that the model that Cerberus and Feinberg are using for defense companies?” – Carol Massar [03:48]
• Evolving Strategy: Rather than simply flipping defense assets, Cerberus is now repositioning for longer-term holds to secure strategic value, as with SubCom (subsea cable firm), whose valuation multiplied sixfold in eight years.
  • Quote: “They recently put SubCom into a single asset continuation vehicle. Its valuation sex tupled over about eight years to $2.3 billion... they'll be able to hold onto that asset through their funds for longer.” – Caleb Melby [04:15]

3. Revolving Door: Cerberus Alumni in the Defense Department

• New Power Structure: Steve Feinberg, now Deputy Defense Secretary, has brought four other Cerberus alumni into the Pentagon, embedding the firm’s ethos in key governmental roles.
  • Quote: “He’s created a whole team within the department that includes these Cerberus guys. They’re in several very important roles. One is running the newly created Economic Defense Unit, and the other is running the Office of Strategic Capital...” – Caleb Melby [05:22]
• Strategic Priorities: These officials have access to enormous federal budgets (e.g., $200 billion lending budget for supply chain onshoring) while Cerberus—still active in private markets—continues acquiring Pentagon contractors.

4. Potential Conflicts and Oversight Questions

• Overlap of Interests: The simultaneous presence of Cerberus veterans in public and private leadership roles poses complex ethical and oversight challenges.
  • Example: Cerberus’s ownership of Stratolaunch (hypersonic testing firm) and participation in other defense technology syndicates alongside government contracts.
  • Quote: “Our story documents a few places where things are overlapping... Cerberus owns Stratolaunch, one of the premier companies for testing hypersonic technology... they're getting new government contracts in real time.” – Caleb Melby [06:14]

5. Historical Pattern and the Future of Cerberus in Defense

• Boom & Bust Cycle: Cerberus’s prominence as a top US defense contractor has fluctuated, often depending on the fortunes of individual portfolio companies like DynCorp.
  • Quote: “When they bought [DynCorp], was already getting into a lot of trouble with the government. Allegations of overbilling the government, allegations of shoddy work... instead of winning new contracts, DynCorp lost a lot of contracts.” – Caleb Melby [07:29]
• Renewed Expansion: Recent acquisitions in 2024 position Cerberus to re-emerge among the largest US defense contractors once updated federal data releases.

---

Notable Quotes & Memorable Moments

• On the new Pentagon-Cerberus dynamic:
  “What we have in Steve Feinberg is a guy who cares a lot about America’s competition on the global stage and invested as a private businessman to do that. And now he's leading with a lot of the same strategies and a lot of the same people on the other side of the equation.”
  – Caleb Melby [08:36]

• On the unprecedented nature of Cerberus’s influence:
  “As they say, Department of Cerberus, but within the government, we barely scratched the surface.”
  – Tim Stenovec [08:54]

---

Timestamps for Key Segments

• Cerberus history and national security pivot: [02:30] – [03:07]
• Private equity versus traditional defense contractor models: [03:48] – [04:15]
• Cerberus alumni inside the Defense Department: [05:22] – [06:06]
• Strategic asset holdings and contract overlaps: [06:14] – [07:11]
• The cyclical nature of Cerberus’s defense business: [07:29] – [08:23]
• Big-picture implications and conclusion: [08:36] – [08:54]

---

Conclusion

This episode highlights the deepening entanglement between top private equity players and US defense policy, using Cerberus as a case study in how strategies honed on Wall Street are infiltrating the Pentagon. With firm alumni now wielding substantial federal power, the ethical lines and potential oversights take on sharper significance, especially as Cerberus lays claim to an even bigger role in the future architecture of US military technology and supply chains.

For in-depth visuals and expanded reporting, the hosts recommend reading Caleb Melby’s full story on Bloomberg.

---

Transcript

[Fidelity Advisor]

As a top performing advisor, you demand top performing funds. That's why Fidelity's 1000 experienced research professionals combine deep insights and advanced analytics to deliver consistent outcomes for clients across market cycles. Explore 300 plus Morningstar rated 4 and 5 star funds at I.fidelity.com Topfunds across all Fundshare classes of Fidelity, Fidelity Advisor Shares and Fidelity ETFs as of 6, 15, 2026. Past performance is no guarantee of future results.

[Tim Stanvak]

Some pretty big earnings. We're talking about Meta, Microsoft and Qualcomm. We're going to be all over them. We'd also love to hear your questions and it's easy to do so. You can submit them to us and you'll get answers from our expert analysis and analysts and experts. They will answer them live on air. Just go to bloomberg.com askradio Send in your questions. We should point out this is exclusive to Bloomberg.com subscribers and terminal clients. You can really get some answers and analysis and thoughts from some of the smartest minds when it comes to Meta, Microsoft and Qualcomm. We'll be breaking them down going through them again. Just go to bloomberg.com askradio and then of course listen to us. Watch us Bloomberg Radio and watch on Bloomberg Originals and YouTube. That's all coming your way at 4:00pm Wall street time. Bloomberg Audio Studios podcasts radio news.

[Carol Massar]

You're listening to Bloomberg businessweek with Carol

[Bloomberg Radio Announcer]

Massar and Tim Stanvak on Bloomberg Radio.

[Carol Massar]

It's today's big take. It's one of the most read stories on the Bloomberg Terminal. It's a business week deep dive into the department of Cerberus.

[Tim Stanvak]

Yeah, like you know this firm. It's a financial firm.

[Carol Massar]

If you're paying attention during the financial crisis then you know this firm.

[Tim Stanvak]

You remember them from the auto bailout and takeover of some of the auto companies. Deputy Defense Secretary Steven Feinberg wants America's war machine to get cozier with companies. The private equity firm he co founded is building a constellation of next generation businesses to answer the call. As we mentioned, it is among our most read. It is a Bloomberg big take here with more on his reporting. It is a very deep dive. Bloomberg News investigative reporter Caleb Melby he joins Tim and me in our Bloomberg Interactive Broker Studio. Quite a mission and missive I should say. Tell us about first of all, what for those who might not know what Cerberus is, but I believe that the Bloomberg audience knows but remind us kind of their history and what they're up to now.

[Caleb Melby]

Yeah, private equity and alternative asset manager, founded in 1992 by Steve Feinberg, who is the subject of this piece. Cerberus has been in this business for a few decades now. And in recent years, basically since the early 2000s, Steve Feinberg, who has a personal interest in national security and defense and spycraft, has really started to push them into investments that contract with the Department of Defense and are otherwise involved in what we might otherwise call the national security space. So critical minerals, supply chain, stuff like that.

[Carol Massar]

I don't typically think of private equity firms as defense contractors. Explain how Cerberus got there.

[Caleb Melby]

Yeah. So they actually appeared for many years on the government's list of top 100 contractors to the Defense Department through their ownership of DynCorp. DynCorp was the largest services firm in Afghanistan. They did things like train police forces, build barracks and similar activities. They continue to operate in acquiring companies that contract with the Department of Defense, including some new big ones, including M1 Support Services, which services aircraft and is also among the largest contractors to the Defense Department.

[Carol Massar]

Private equity firms, typically. Well, I don't want to say there's a typical way, but, you know, some would argue that there's a textbook sort of like depending if you're doing a leverage buyout or not. But you. You make an investment, you buy a company, you create efficiencies at the company. Yeah. Efficiencies can be a euphemism for laying people off.

[Tim Stanvak]

Correct.

[Carol Massar]

Or consolidating operations, to be fair.

[Caleb Melby]

Yep.

[Carol Massar]

Then they sell it.

[Fidelity Advisor]

Yeah.

[Carol Massar]

And there's a return. Is that. Is that the model that Cerberus and Feinberg are using for defense companies?

[Caleb Melby]

It's a really interesting question, and we're starting to get some clues about that for this new wave of companies that they started acquiring and in some cases investing in, because created a venture arm as well, going back to about 2018. But one company we talk about and look into in our story is called Subcom, which lays subsea fiber optic cables. Very important right now with straight of Hormuz and everything else. They recently put subcommon to a single asset continuation vehicle. Its valuation sex tupled over like about eight years to $2.3 billion. And. And that will allow them to kind of circumvent that sort of deal lifecycle that you're talking about here. They'll be able to hold onto that asset through their funds for longer. They really care about it and they're really interested in it.

[Tim Stanvak]

You know, safe to say, fair to say accurate to say that we have an administration where the lines get a little Bit messy.

[Caleb Melby]

Yeah.

[Tim Stanvak]

So here you have someone who created this firm, co founded this firm, and now he's Deputy Secretary of Defense.

[Caleb Melby]

Yeah.

[Tim Stanvak]

And then he's making investment. Like, tell us how that works.

[Caleb Melby]

Yeah, absolutely. So coming into the Defense Department with Steve Feinberg are four other guys who have worked with him on these types of investments at Cerberus. He's created a whole team within the department that includes these Cerberus guys. They're in several very important roles. One is running the newly created Economic Defense Unit, and the other is running the Office of Strategic Capital, which has a $200 billion lending budget to help onshore America's critical mineral supply chain and other important investments at the same time. Over here, Cerberus is in the process of acquiring, building, and investing in a lot of companies that do business with the Defense Department.

[Tim Stanvak]

How does that work? And to be fair, just because something looks like it's very connected doesn't mean that there's anything going wrong. I want to be fair about that.

[Caleb Melby]

But, yeah. Our story documents a few places where things are overlapping. So the US Is behind in hypersonic weapons and hypersonic technology. Cerberus owns stratolaunch, one of the premier companies for testing hypersonic technology in America. And they're playing part of the role to catch up to that. So they're getting new government contracts in real time. And the US has also been interested in a while now for creating essentially what some people call a Huawei killer, finding a way to onshore communications technology back to the US and create an AI native 6G network. And Cerberus also owns a company that is enmeshed in this kind of syndicate and of companies, most of them much bigger, Nvidia, Booz, Allen Hamilton, that are working with the Defense Department to develop that technology as an America first technology.

[Carol Massar]

One point that you make in your piece is that this isn't really new to Cerberus and at least in terms of, like, being a defense contractor, owning companies that are defense contractors. In 2010, as your piece points out, they were the 11th biggest U.S. defense contractor. Why has it waxed and waned so much? Is it tied to politics at all?

[Caleb Melby]

It's tied to some of their. Their biggest defense contractors that they hold. So DynCorp, when they bought it, was already getting into a lot of trouble with the government. Allegations of overbilling the government, allegations of shoddy work. And Cerberus bought it basically as like, a classic turnaround effort. Can we clean up this company and everything else but U.S. u.S. Intervention in Afghanistan obviously went away. And instead of winning new contracts, Dyncor lost a lot of contracts. So you saw Dyncor's revenue fall and then you saw them sell Dyncor. And from what we can see, we don't have 2025 data from the government yet, but from the companies they bought in 2024, it looks very likely they'll start to reappear on those lists in the future of the biggest contractors.

[Tim Stanvak]

A lot of questions. There's a lot in here and I highly recommend everybody check it out online. But it's just kind of fascinating to track. And you do, you know, there's questions of oversight, right?

[Caleb Melby]

Yeah, yeah. I mean, really, what we have in Steve Feinberg is a guy who cares a lot about America's competition on the global stage and invested as a private businessman to do that. And now he's leading with a lot of the same strategies and a lot of the same focuses and a lot of the same people on the other side of the equation.

[Tim Stanvak]

Yeah, as, as they say, Department of Cerberus, but within the government, we barely scratched the surface.

[Carol Massar]

Check out the story. It's got incredible visuals.

[Tim Stanvak]

Yeah. And a lot of information. It is the Bloomberg big take. It is among the most read stories and it is by the amazing Caleb Melby. He's Bloomberg News investigative reporter joining us here in studio.

[Carol Massar]

Whatever your goal, trade show giveaways, client gifts or team gear, 4imprint has the promo products to match with thousands of options from apparel and drinkware to tech and totes, it's easy to find the right fit for your brand and budget. With standout choices at every price point. And with their 360 degree guarantee, you can be four imprint certain your order will show up just right, right on time. Explore [e-mail] 4imprint for certain, aging doesn't

[Vital Proteins Advertiser]

stop and neither should you with vital proteins, collagen and protein shakes. Because around the age of 30, your body needs more support for movement and recovery. On workout and rest days, reach for a 30 gram total protein shake or go with our classic collagen peptides. Help support healthy hair, skin, nails, bones and joints so you can stay vital. Stay you. Visit vitalproteins.com to learn more and where to buy. These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease.

[Bloomberg Radio Announcer]

This episode is supported by FX's the Shards, a seductive drama from executive producer Ryan Murphy. Set in 1980s Los Angeles. The series follows a group of glamorous, deeply entangled high school seniors drawn into a life of wealth, beauty, parties and excess. At its center is Brett, whose reality begins to unravel when the arrival of a new student coincides with a series of mysterious murders. FX's the Shards premieres August 5th on FX and Hulu.