Forstmann Little & Company
Encyclopedia
Forstmann, Little & Company is a private equity
firm, specializing in leveraged buyout
s (LBOs). At its peak in the late 1990s, Forstmann Little was among the largest private equity firms globally. Ultimately, the firm would suffer from the bursting of the internet and telecom bubbles
, having invested heavily in technology and telecommunications companies.
and Nick Forstmann
, and Brian Little
. With the deaths of Brian Little and Nicholas Forstmann in 2000 and 2001, respectively, Ted Forstmann was the chief partner. A third brother, J. Anthony Forstmann, is a limited partner in the firm.
Since its inception in 1978, the firm made more than 30 acquisitions and significant investments returning over $14 billion in profit for its investors.
Successful acquisitions include Gulfstream Aerospace
, Topps Playing Cards
, Dr Pepper
, Stanadyne Inc., and General Instrument
. The company has usually been successful in making a profit on such purchases, selling Gulfstream to General Dynamics
, and General Instrument to Motorola
. In the case of Gulfstream, Ted Forstmann took direct control of the financially ailing company's day-to-day operations to improve the company's attractiveness to a potential acquirer.
The company has also had some flops, such as McLeodUSA
and XO Communications
.
One prominent episode in the life of the company was the 1988 bidding war for RJR Nabisco
. Forstmann Little offered to acquire RJR Nabisco
, but the management (chiefly F. Ross Johnson
) instead chose Shearson Lehman Hutton. In the end, the board of directors chose Forstmann Little's arch-rival, Kohlberg Kravis Roberts & Co.
. The episode was popularized in the book Barbarians at the Gate: The Fall of RJR Nabisco
.
Other headline transactions the firm participated in include Revlon
(1985), which resulted in the so-called Revlon Duty, and Citadel Broadcasting, of which Forstmann Little owns 27%, following a merger with ABC Radio in 2006. In 2004, Forstmann Little acquired IMG
in a $750 million deal, and in 2005 bought 24 Hour Fitness for $1.6 billion.
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
firm, specializing in leveraged buyout
Leveraged buyout
A leveraged buyout occurs when an investor, typically financial sponsor, acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage...
s (LBOs). At its peak in the late 1990s, Forstmann Little was among the largest private equity firms globally. Ultimately, the firm would suffer from the bursting of the internet and telecom bubbles
Dot-com bubble
The dot-com bubble was a speculative bubble covering roughly 1995–2000 during which stock markets in industrialized nations saw their equity value rise rapidly from growth in the more...
, having invested heavily in technology and telecommunications companies.
History
The company was founded in 1978 by brothers TedTheodore J. Forstmann
Theodore Joseph "Ted" Forstmann was one of the founding partners of Forstmann Little & Company, a private equity firm, and chairman and CEO of IMG, a global sports and media company. A member of the Republican Party, Forstman was a philanthropist...
and Nick Forstmann
Nicholas C. Forstmann
Nicholas C. "Nick" Forstmann was one of the founding partners of Forstmann Little & Company, a private equity firm.After attending The Lawrenceville School, Nicholas Forstmann graduated from Georgetown University in 1969, and began working at the Morgan Guaranty Trust Company...
, and Brian Little
William Brian Little
William Brian Little , known as Brian Little, was one of the founding partners of Forstmann Little & Company, a private equity firm. He graduated from Colgate University in 1964, and he later served as the chairman of the Board of Trustees. An art building at Colgate was named Little Hall after...
. With the deaths of Brian Little and Nicholas Forstmann in 2000 and 2001, respectively, Ted Forstmann was the chief partner. A third brother, J. Anthony Forstmann, is a limited partner in the firm.
Since its inception in 1978, the firm made more than 30 acquisitions and significant investments returning over $14 billion in profit for its investors.
Successful acquisitions include Gulfstream Aerospace
Gulfstream Aerospace
Gulfstream Aerospace Corporation is a producer of several models of jet aircraft. Gulfstream has been a unit of General Dynamics since 1999.The company has produced more than 1,500 aircraft for corporate, government, private, and military customers around the world...
, Topps Playing Cards
Topps
The Topps Company, Inc., manufactures chewing gum, candy and collectibles. Based in New York, New York, Topps is best known as a leading producer of baseball cards, football cards, basketball cards, hockey cards and other sports and non-sports themed trading cards.-Company history:Topps itself was...
, Dr Pepper
Dr Pepper
Dr Pepper is a soft drink, marketed as having a unique flavor. The drink was created in the 1880s by Charles Alderton of Waco, Texas and first served around 1885. Dr Pepper was first nationally marketed in the United States in 1904 and is now also sold in Europe, Asia, Canada, Mexico, Australia ...
, Stanadyne Inc., and General Instrument
General Instrument
General Instrument was an electronics manufacturer based in Horsham, PA specializing in semiconductors and cable television equipment. The company was active until 1997, when it split into which was later acquired by Vishay Intertechnology in 2001, CommScope and NextLevel Systems General...
. The company has usually been successful in making a profit on such purchases, selling Gulfstream to General Dynamics
General Dynamics
General Dynamics Corporation is a U.S. defense conglomerate formed by mergers and divestitures, and as of 2008 it is the fifth largest defense contractor in the world. Its headquarters are in West Falls Church , unincorporated Fairfax County, Virginia, in the Falls Church area.The company has...
, and General Instrument to Motorola
Motorola
Motorola, Inc. was an American multinational telecommunications company based in Schaumburg, Illinois, which was eventually divided into two independent public companies, Motorola Mobility and Motorola Solutions on January 4, 2011, after losing $4.3 billion from 2007 to 2009...
. In the case of Gulfstream, Ted Forstmann took direct control of the financially ailing company's day-to-day operations to improve the company's attractiveness to a potential acquirer.
The company has also had some flops, such as McLeodUSA
McLeodUSA
McLeodUSA, based in Hiawatha, Iowa, is one of the nation’s largest independent competitive local exchange carriers . The company also has offices in Tulsa, Oklahoma, and The Woodlands, Texas....
and XO Communications
XO Communications
XO Communications is a telecommunications company owned by XO Holdings, Inc...
.
One prominent episode in the life of the company was the 1988 bidding war for RJR Nabisco
RJR Nabisco
RJR Nabisco, Inc., was an American conglomerate formed in 1985 by the merger of Nabisco Brands and R.J. Reynolds Tobacco Company. RJR Nabisco was purchased in 1988 by Kohlberg Kravis Roberts & Co...
. Forstmann Little offered to acquire RJR Nabisco
RJR Nabisco
RJR Nabisco, Inc., was an American conglomerate formed in 1985 by the merger of Nabisco Brands and R.J. Reynolds Tobacco Company. RJR Nabisco was purchased in 1988 by Kohlberg Kravis Roberts & Co...
, but the management (chiefly F. Ross Johnson
F. Ross Johnson
-Biography:Born in Winnipeg, Manitoba, into a lower-middle-class family, he used a military cadet scholarship program to attend the University of Manitoba where he graduated in 1952 with a Bachelor of Commerce degree and was a member of the fraternity Phi Delta Theta. He went on to earn an M.B.A....
) instead chose Shearson Lehman Hutton. In the end, the board of directors chose Forstmann Little's arch-rival, Kohlberg Kravis Roberts & Co.
Kohlberg Kravis Roberts & Co.
KKR & Co. L.P. is an American-based global private equity firm, specializing in leveraged buyouts, based in New York. The firm sponsors and manages private equity investment funds. Since its inception, the firm has completed over $400 billion of private equity transactions and was a pioneer in...
. The episode was popularized in the book Barbarians at the Gate: The Fall of RJR Nabisco
Barbarians at the Gate: The Fall of RJR Nabisco
Barbarians at the Gate: The Fall of RJR Nabisco is a 1990 book about the leveraged buyout of RJR Nabisco, written by investigative journalists Bryan Burrough and John Helyar. The book is based upon a series of articles written by the authors for The Wall Street Journal...
.
Other headline transactions the firm participated in include Revlon
Revlon
Revlon is an American cosmetics, skin care, fragrance, and personal care company founded in 1932.-History:Revlon was founded in the midst of the Great Depression, 1932, by Charles Revson and his brother Joseph, along with a chemist, Charles Lachman, who contributed the "L" in the Revlon name...
(1985), which resulted in the so-called Revlon Duty, and Citadel Broadcasting, of which Forstmann Little owns 27%, following a merger with ABC Radio in 2006. In 2004, Forstmann Little acquired IMG
IMG (business)
IMG, originally known as the International Management Group is a global sports and media business headquartered in New York City.-History:...
in a $750 million deal, and in 2005 bought 24 Hour Fitness for $1.6 billion.
External links
- Forstmann Little & Company (Archive of Company Website from May 2000)