Jenny Sanford's Wall Street past

NEW YORK (Fortune) -- Long before she was the sad-eyed First Lady of The Palmetto State, Jenny Sullivan Sanford was a well-respected investment banker at Lazard Freres. In fact, she could have been become a major dealmaker had she not put her career on hold to manage the political one of her husband, South Carolina's philandering governor Mark Sanford.

"She was smart and strong," remembers Jeffrey Leeds, who worked with Sullivan at Lazard in the mid-1980s and now runs his eponymous private equity firm. "She was by no means stuffy -- far from it -- but she gave a sense of having direction and of having strong values that were not particularly fashionable in New York at that time. And she had the most amazing capacity to work as hard if not harder than others putting in inhuman hours and never appear disheveled or untidy."

After stints working on Lazard's small bond desk and long hours for Lazard partner Luis Rinaldini -- who has since left the firm to start Groton Partners, an advisory and investment boutique -- she spent the last two years or so at Lazard working for Steve Rattner, then the partner in charge of Lazard's media and telecommunications practice.

She helped Rattner, now head of the U.S. Treasury's auto task force, raise $175 million for the $300 million first buyout fund for what became Providence Media Partners, devoted exclusively to media and telecom investing. That first fund's phenomenal success launched the career of Providence founder Jonathan Nelson into the stratosphere of pre-eminent media and telecommunications private-equity investors.

Rattner, who did not respond to an e-mail request for a comment about working with Sullivan, negotiated a highly unusual -- and highly lucrative -- fee arrangement with Providence that gave Lazard not only a placement fee but also a percentage of the Providence's profits on the first fund. This proved highly lucrative for Lazard -- which made around $33 million -- and for Rattner, who had negotiated with Michel David-Weill, the Lazard patriarch, to get for himself 8.25% of the firm's take, or around $2.72 million.

Mrs. Sanford (nee Sullivan) was no stranger to how big business works when she joined Lazard. On the surface, Jenny Sullivan was not a typical Lazard hire. She grew up in Winnetka, Illinois, as one of five siblings and attended Woodlands Academy of the Sacred Heart, a private Catholic all-girls school in Lake Forest, Illinois. After graduating from Georgetown University, she worked briefly for the House Ways and Means Committee, run then by her powerful Congressman, Dan Rostenkowski.

What did make her Lazard material was that Sullivan's father, John W. Sullivan, was president of the Skil Coporation at the time of its sale to Emerson in 1979 for $58 million. And her family, much like the Lazard firm itself, could trace its wealth back to a French settler in New Orleans.

In the early 1900s, the inventor Edmond Michel immigrated to New Orleans and, as the legend goes, one day in 1921 while watching farm workers using machetes to cut the thick stalks of sugar cane -- backbreaking work to be sure -- decided there must be a better way. This led Michel to develop the prototype for the first electric handsaw by affixing a machete blade to a bulky electric motor.

A New Orleans newspaper wrote a small feature about Michel and his handsaw that caught the eye of a Minneapolis land developer named Joseph W. Sullivan -- Jenny Sullivan Sanford's great grandfather.

The two men decided to go into business together, moved to Chicago, and began drawing up the blueprints for a more efficient, more marketable electric handsaw. On Oct. 21, 1924, a patent was issued for what was known at Michel Electric Hand Saw. It was a hit.

After a few years, Michel wanted out and the Sullivan family took complete control. Joseph Sullivan changed the name of the company to Skilsaw, Inc. after his wife remarked one day that "whoever could do that" -- operate one of the early handsaws -- "must have a lot of skill, and it takes a lot of skill to do that."

His son, Bolton Sullivan -- Jenny's grandfather -- also helped start the company.

Her other grandfather was one of the founders of Winston & Strawn, the large Chicago-based law firm. The family was considered to be part of Chicago's "gentry."

After the sale, Jenny's father John became chairman of the Reading Company, a holding company in Philadelphia. He was also the president of the Loblolly Pines Development Company in Hobe Sound. Sullivan's company is the developer of a gated and exclusive community of large homes in the town. He and his wife, Susan, have owned their home in the development -- valued at $2.34 million -- since 1991. The Governor and Mrs. Sanford and their four boys stayed in her parents' home this past holiday weekend.

While still at Lazard -- in November 1989 -- Sullivan married Marshall (Mark) Sanford, who had a brief two-month stint working for Goldman Sachs while in graduate business school at the University of Virginia's Darden School. After graduation, Sanford was working as a financial analyst at Chemical Realty Corporation in New York.

They had met when Sanford gave Sullivan a ride to a party in the Hamptons. They were married in Jupiter Island, Florida by the president of Georgetown, a Catholic priest. Sullivan left Lazard a year later to move to South Carolina with her new husband. She managed several of his successful political campaigns, including that of his first run for Governor of South Carolina.

The consensus among those who worked with Sanford at Lazard is that she was on a trajectory to the top of the M&A profession. She could easily, many think, have had a career similar to that of Nancy Peretsman, at Allen & Co., or even of Rattner himself.

Of her current situation, an old Lazard hand described it as "pretty sad" but said Mrs. Sanford was a "great lady" and "if anybody can handle this with grace, it is she."

-- William D. Cohan is the author of "House of Cards: A Tale of Hubris and Wretched Excess on Wall Street," published in March by Doubleday Books, a division of Random House, Inc.