Thomas H. Lee

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This article is about the businessman and private equity investor. For private equity firm, see Thomas H. Lee Partners.

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 buyouts. 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.

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[edit] Early career

Lee graduated from Harvard College 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.

[edit] Thomas H. Lee Partners

In 1974, Lee founded a new investment firm to focus on acquiring companies through leveraged buyout 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 reported 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. [1] 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 funds and completed more than 100 investments representing in excess of $125 billion of aggregate purchase price.[2]

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.[3][4]

[edit] Resignation and Later Career

In March 2006, Lee resigned from THL 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 on the same leveraged buyout transactions that he had been completing for nearly 35 years at THL.[5] [6] Both Lee and THL insisted that 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.[7]

[edit] 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 Art and the Whitney Museum of American Art.

Lee donated $22 million to Harvard University in 1996.[8]

[edit] References

  1. ^ Thomas H. Lee In Snapple Deal (New York Times, 1992)
  2. ^ Thomas H. Lee Partners website
  3. ^ Thomas H. Lee Partners Files Suit Against Former Refco Executives (New York Times, 2005)
  4. ^ Bankruptcy Trustee Sues Big Investor in Refco (New York Times, August 9, 2007)
  5. ^ Thomas Lee Steps Down From His Namesake Firm March 26, 2006
  6. ^ Founding Partner To Leave Thomas H. Lee (Wall Street Journal, 2006)
  7. ^ Lee denies discord (BusinessWeek, December 21, 2005)
  8. ^ Thomas Lee Gives Harvard $22 Million

[edit] External links