Thomas H. Lee
Encyclopedia
Thomas H. Lee is an American businessman, financier and investor and is credited with being one of the early pioneers in private equity
and specifically leveraged buyout
s. Thomas H. Lee Partners
(THL
), the firm he founded in 1974, is among the oldest and largest private equity firms globally. Lee is currently the managing partner of Lee Equity Partners
, a private equity firm
he founded in 2006 after leaving Thomas H. Lee Partners
.
in 1965 and went to work as an analyst in the institutional research department of L.F. Rothschild
in New York. The next year, Lee went to work for the First National Bank of Boston, where he spent eight years ultimately rising to the rank of Vice President in 1973.
Lee is said to have begun investing with a $150,000 inheritance.
transactions. By the mid-1980s, THL
was firmly established among the top tier of a new class of private equity
investors, while taking a friendlier approach than the so-called corporate raiders of the era (e.g., Nelson Peltz
, Ronald Perelman
, Carl Icahn
).
One of THL's early successes was the 1985 acquisition of Akron, Ohio
-based Sterling Jewelers for $28 million. Lee reportedly put in less than $3 million and when the company was sold two years later for $210 million walked away with over $180 million in profits. The combined company was an early predecessor to what is now Signet Group
, one of Europe's largest jewelry retail chains.
In 1992, THL
's acquisition of Snapple Beverages marked the resurrection of the leveraged buyout
after several dormant years in the wake of the RJR Nabisco
takeover, the fall of Michael Milken
, and the collapse of Drexel Burnham Lambert
in the late 1980s and early 1990s. After ceding public attention to his competitors, most notably Kohlberg Kravis Roberts & Co., the Snapple Beverages transaction catapulted Lee to prominence. Only eight months after buying the company, Lee took Snapple Beverages public
and in 1994, only two years after the original acquisition, Lee sold the company to Quaker Oats for $1.7 billion. Lee was estimated to have made $900 million for himself and his investors from the sale. Quaker Oats would subsequently sell the company, which performed poorly under new management, three years later for only $300 million.
From 1974 through 2006, THL
raised more than $22 billion of capital in six institutional
private equity fund
s and completed more than 100 investments representing in excess of $125 billion of aggregate purchase price.
The final years of Lee's tenure at THL were marred to a certain extent by the firm's investment in Refco
, a financial services
company specializing in commodities and futures
contracts that collapsed suddenly in October 2005, only months after its IPO. THL as the lead investor (and Lee himself) was named in a class action
shareholder lawsuit against Refco
, along with Goldman Sachs
, Credit Suisse
, Bank of America
and Grant Thornton
.
as the firm was nearing completion of fundraising for its sixth and current private equity fund
. In the same year, Lee formed Lee Equity Partners
a private equity firm
focused more on growth capital
transactions than the leveraged buyout
s favored by THL.
Both Lee and THL insisted that the move was amicable; however, persistent reports suggested that Lee, who had limited his day-to-day involvement in the firm and had relocated to New York City
, had been pushed out by several partners.
and the Whitney Museum of American Art
.
Lee donated $22 million to Harvard University
in 1996.
Lee is a friend of Bill Clinton
and Hillary Clinton. In June 2008 at the conclusion of Hillary's unsuccessful presidential run, she and Bill were reported to have stayed at his East Hampton, New York
beach front home for a few days for the period when she was out of the public eye.
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....
and specifically 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. Thomas H. Lee Partners
Thomas H. Lee Partners
Thomas H. Lee Partners is a private equity firm based in Boston, Massachusetts specializing in leveraged buyouts, growth capital, special situations, industry consolidations, and recapitalizations....
(THL
Thomas H. Lee Partners
Thomas H. Lee Partners is a private equity firm based in Boston, Massachusetts specializing in leveraged buyouts, growth capital, special situations, industry consolidations, and recapitalizations....
), the firm he founded in 1974, is among the oldest and largest private equity firms globally. Lee is currently the managing partner of Lee Equity Partners
Lee Equity Partners
Lee Equity Partners is a private equity firm focused on growth capital investments in middle-market companies across a range of industries.The firm, which is based in New York City, was founded in 2006 by Thomas H. Lee, the notable private equity investor who previously founded Thomas H...
, a private equity firm
Private equity firm
A private equity firm is an investment manager that makes investments in the private equity of operating companies through a variety of loosely affiliated investment strategies including leveraged buyout, venture capital, and growth capital...
he founded in 2006 after leaving Thomas H. Lee Partners
Thomas H. Lee Partners
Thomas H. Lee Partners is a private equity firm based in Boston, Massachusetts specializing in leveraged buyouts, growth capital, special situations, industry consolidations, and recapitalizations....
.
Early career
Lee graduated from Harvard CollegeHarvard College
Harvard College, in Cambridge, Massachusetts, is one of two schools within Harvard University granting undergraduate degrees...
in 1965 and went to work as an analyst in the institutional research department of L.F. Rothschild
L.F. Rothschild
L.F. Rothschild was a merchant and investment banking firm based in the United States and founded in 1899. The firm collapsed following the 1987 stock market crash.-History:...
in New York. The next year, Lee went to work for the First National Bank of Boston, where he spent eight years ultimately rising to the rank of Vice President in 1973.
Lee is said to have begun investing with a $150,000 inheritance.
Thomas H. Lee Partners
In 1974, Lee founded a new investment firm to focus on acquiring companies through leveraged buyoutLeveraged 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...
transactions. By the mid-1980s, THL
Thomas H. Lee Partners
Thomas H. Lee Partners is a private equity firm based in Boston, Massachusetts specializing in leveraged buyouts, growth capital, special situations, industry consolidations, and recapitalizations....
was firmly established among the top tier of a new class of private equity
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....
investors, while taking a friendlier approach than the so-called corporate raiders of the era (e.g., Nelson Peltz
Nelson Peltz
Nelson Peltz is an American businessman. He is a board director of Wendy's Group, the franchise parent of T.J. Cinnamons, Pasta Connection and Wendy's. Peltz is the former owner of Snapple.- Background :...
, Ronald Perelman
Ronald Perelman
Ronald Owen Perelman is an American business magnate. Through his company MacAndrews & Forbes Holdings Inc., he has invested in various companies in grocery, cigar, licorice, makeup, car, photography, television, camping, security, lottery, jewelry, banks, and comic book industries.-Early...
, Carl Icahn
Carl Icahn
Carl Celian Icahn is an American business magnate and investor.-Biography:Icahn was raised in Far Rockaway, Queens, New York City, where he attended Far Rockaway High School. His father was a cantor, his mother was a schoolteacher...
).
One of THL's early successes was the 1985 acquisition of Akron, Ohio
Akron, Ohio
Akron , is the fifth largest city in the U.S. state of Ohio and the county seat of Summit County. It is located in the Great Lakes region approximately south of Lake Erie along the Little Cuyahoga River. As of the 2010 census, the city had a population of 199,110. The Akron Metropolitan...
-based Sterling Jewelers for $28 million. Lee reportedly put in less than $3 million and when the company was sold two years later for $210 million walked away with over $180 million in profits. The combined company was an early predecessor to what is now Signet Group
Signet Group
Signet Jewelers Limited is the world's largest specialty retail jeweller. The Bermuda-domiciled, British headquartered company is listed on both the New York Stock Exchange and the London Stock Exchange. The group focuses on the middle mass jewelry segment and has number one positions in both the...
, one of Europe's largest jewelry retail chains.
In 1992, THL
Thomas H. Lee Partners
Thomas H. Lee Partners is a private equity firm based in Boston, Massachusetts specializing in leveraged buyouts, growth capital, special situations, industry consolidations, and recapitalizations....
's acquisition of Snapple Beverages marked the resurrection of the 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...
after several dormant years in the wake of the 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...
takeover, the fall of Michael Milken
Michael Milken
Michael Robert Milken is an American business magnate, financier, and philanthropist noted for his role in the development of the market for high-yield bonds during the 1970s and 1980s, for his 1990 guilty plea to felony charges for violating US securities laws, and for his funding of medical...
, and the collapse of Drexel Burnham Lambert
Drexel Burnham Lambert
Drexel Burnham Lambert was a major Wall Street investment banking firm, which first rose to prominence and then was forced into bankruptcy in February 1990 by its involvement in illegal activities in the junk bond market, driven by Drexel employee Michael Milken. At its height, it was the...
in the late 1980s and early 1990s. After ceding public attention to his competitors, most notably Kohlberg Kravis Roberts & Co., the Snapple Beverages transaction catapulted Lee to prominence. Only eight months after buying the company, Lee took Snapple Beverages public
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
and in 1994, only two years after the original acquisition, Lee sold the company to Quaker Oats for $1.7 billion. Lee was estimated to have made $900 million for himself and his investors from the sale. Quaker Oats would subsequently sell the company, which performed poorly under new management, three years later for only $300 million.
From 1974 through 2006, THL
Thomas H. Lee Partners
Thomas H. Lee Partners is a private equity firm based in Boston, Massachusetts specializing in leveraged buyouts, growth capital, special situations, industry consolidations, and recapitalizations....
raised more than $22 billion of capital in six institutional
Institutional investor
Institutional investors are organizations which pool large sums of money and invest those sums in securities, real property and other investment assets...
private equity fund
Private equity fund
A private equity fund is a collective investment scheme used for making investments in various equity securities according to one of the investment strategies associated with private equity....
s and completed more than 100 investments representing in excess of $125 billion of aggregate purchase price.
The final years of Lee's tenure at THL were marred to a certain extent by the firm's investment in Refco
Refco
Refco was a New York-based financial services company, primarily known as a broker of commodities and futures contracts. It was founded in 1969 as "Ray E. Friedman and Co." Prior to its collapse in October, 2005, the firm had over $4 billion in approximately 200,000 customer accounts, and it was...
, a financial services
Financial services
Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are credit unions, banks, credit card companies, insurance companies, consumer finance companies,...
company specializing in commodities and futures
Futures contract
In finance, a futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange...
contracts that collapsed suddenly in October 2005, only months after its IPO. THL as the lead investor (and Lee himself) was named in a class action
Class action
In law, a class action, a class suit, or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued...
shareholder lawsuit against Refco
Refco
Refco was a New York-based financial services company, primarily known as a broker of commodities and futures contracts. It was founded in 1969 as "Ray E. Friedman and Co." Prior to its collapse in October, 2005, the firm had over $4 billion in approximately 200,000 customer accounts, and it was...
, along with Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
, Credit Suisse
Credit Suisse
The Credit Suisse Group AG is a Swiss multinational financial services company headquartered in Zurich, with more than 250 branches in Switzerland and operations in more than 50 countries.-History:...
, Bank of America
Bank of America
Bank of America Corporation, an American multinational banking and financial services corporation, is the second largest bank holding company in the United States by assets, and the fourth largest bank in the U.S. by market capitalization. The bank is headquartered in Charlotte, North Carolina...
and Grant Thornton
Grant Thornton
Grant Thornton LLP encompasses the U.S. operations of Grant Thornton International, the largest accounting organizations outside of the Big Four . The member firms of Grant Thornton International comprise a global network of 27,000 employees and 2,207 partners in more than 110 countries...
.
Resignation and later career
In March 2006, Lee resigned from THLThomas H. Lee Partners
Thomas H. Lee Partners is a private equity firm based in Boston, Massachusetts specializing in leveraged buyouts, growth capital, special situations, industry consolidations, and recapitalizations....
as the firm was nearing completion of fundraising for its sixth and current private equity fund
Private equity fund
A private equity fund is a collective investment scheme used for making investments in various equity securities according to one of the investment strategies associated with private equity....
. In the same year, Lee formed Lee Equity Partners
Lee Equity Partners
Lee Equity Partners is a private equity firm focused on growth capital investments in middle-market companies across a range of industries.The firm, which is based in New York City, was founded in 2006 by Thomas H. Lee, the notable private equity investor who previously founded Thomas H...
a private equity firm
Private equity firm
A private equity firm is an investment manager that makes investments in the private equity of operating companies through a variety of loosely affiliated investment strategies including leveraged buyout, venture capital, and growth capital...
focused more on growth capital
Growth capital
Growth capital is a type of private equity investment, most often a minority investment, in relatively mature companies that are looking for capital to expand or restructure operations, enter new markets or finance a significant acquisition without a change of control of the business.Companies...
transactions than the 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 favored by THL.
Both Lee and THL insisted that the move was amicable; however, persistent reports suggested that Lee, who had limited his day-to-day involvement in the firm and had relocated to New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
, had been pushed out by several partners.
Other pursuits
Lee is an avid art collector and is active in various notable organizations including serving as a trustee of Lincoln Center, the Museum of Modern ArtMuseum of Modern Art
The Museum of Modern Art is an art museum in Midtown Manhattan in New York City, on 53rd Street, between Fifth and Sixth Avenues. It has been important in developing and collecting modernist art, and is often identified as the most influential museum of modern art in the world...
and the Whitney Museum of American Art
Whitney Museum of American Art
The Whitney Museum of American Art, often referred to simply as "the Whitney", is an art museum with a focus on 20th- and 21st-century American art. Located at 945 Madison Avenue at 75th Street in New York City, the Whitney's permanent collection contains more than 18,000 works in a wide variety of...
.
Lee donated $22 million to Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...
in 1996.
Lee is a friend of Bill Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...
and Hillary Clinton. In June 2008 at the conclusion of Hillary's unsuccessful presidential run, she and Bill were reported to have stayed at his East Hampton, New York
East Hampton (village), New York
The Village of East Hampton is a village in Town of East Hampton, New York. It is located in Suffolk County, on the South Fork of eastern Long Island...
beach front home for a few days for the period when she was out of the public eye.
External links
- Thomas H. Lee Partners (official website)
- Return of the LBO
- The Rise of Private Equity WSJ.com
- Thomas H. Lee (Forbes)
- Thomas H Lee (Forbes)
- The Art Of The Deal (Interior Design, 2005)
- Thomas H. Lee Co. - Company History