Theodore J. Forstmann
Encyclopedia
Theodore Joseph "Ted" Forstmann (February 13, 1940 – November 20, 2011) 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. He supported school choice and funded scholarship programs for the disadvantaged.
, the second of six children. His father, Julius, ran a wool business that went bankrupt in 1958. Julius Forstmann had inherited Forstmann Woolen Co. from his own father, one of the world's richest men. Forstmann was a graduate of Greenwich Country Day School
and Phillips Academy
. He then played goalie on the ice hockey team at Yale University
where he was a member of Delta Kappa Epsilon
fraternity. Forstmann later attended Columbia Law School
where he earned a juris doctrate, which he financed through gambling proceeds.
, founded Forstmann Little in 1978 with his younger brother Nicholas
, and William Brian Little
. Forstmann's second brother, J. Anthony Forstmann, founded ForstmannLeff
.
Under Forstmann's leadership, Forstmann Little & Company made 31 acquisitions and significant investments and returned more than $15 billion of profits to investors. In addition to IMG, some of the firm's investments include Gulfstream Aerospace
, Dr. Pepper, The Topps Co., Stanadyne Corp., Community Health Systems
, Ziff Davis
, Yankee Candle, General Instrument Corporation, and most recently, Citadel Broadcasting
and 24 Hour Fitness.
, as he and his company attempted to acquire RJR Nabisco
. In the subsequent film adaptation
, he was portrayed by actor David Rasche
. The book portrayed Forstmann as a critic of KKR's
Henry Kravis
and his investment methods.
Forstmann's criticism of Kravis (and much of the rest of the financial industry during the 1980s) centered on the issuance of high yield "junk" bonds to finance mergers and acquisitions. (Forstmann referred to junk bonds as "wampum") When the junk bond market later fell into disfavor as a result of scandal, Forstmann's criticism was seen as prescient, as his more conventional investment strategy had been able to maintain nearly the same level of profitability as companies such as KKR and Revlon
that built their strategy around high-yield debt
.
induction ceremonies.
Forstmann dedicated significant personal resources to the cause of education reform. He was a prominent supporter of school choice
. In 1998 he and friend John T. Walton
established the Children's Scholarship Fund
to provide tuition assistance for low-income families wanting to send their children to private school.
In February 2011, Forstmann became a signatory of The Giving Pledge
.
He was an active member of the Republican Party.
alleged that U.S. intelligence agencies had bugged Forstmann's phone or plane and monitored his relationship with Diana. She and her sons were said to have planned to visit him in summer 1997, but British security reportedly blocked the visit over security concerns related to the bugging.
In May 2011, Forstmann was diagnosed with brain cancer and received treatment at the Mayo Clinic.
Forstmann had two children: Everest and Siya, both adopted from South Africa.
Forstmann died on November 20, 2011 due to complications from brain cancer. He had a net worth of US$
1.6 billion as of 2011.
Forstmann Little & Company
Forstmann, Little & Company is a private equity firm, specializing in leveraged buyouts . At its peak in the late 1990s, Forstmann Little was among the largest private equity firms globally...
, a 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....
firm, and chairman and CEO of IMG
IMG (business)
IMG, originally known as the International Management Group is a global sports and media business headquartered in New York City.-History:...
, a global sports and media company. A member of the Republican Party
Republican Party
-Africa:*Republican Party *Republican Party *Republican Party -Asia:*Republican Party *Republican Party *Republican Party *Republican Party of Afghanistan*Republican Party of India...
, Forstman was a philanthropist. He supported school choice and funded scholarship programs for the disadvantaged.
Early life
Forstmann grew up in Greenwich, ConnecticutGreenwich, Connecticut
Greenwich is a town in Fairfield County, Connecticut, United States. As of the 2010 census, the town had a total population of 61,171. It is home to many hedge funds and other financial service companies. Greenwich is the southernmost and westernmost municipality in Connecticut and is 38+ minutes ...
, the second of six children. His father, Julius, ran a wool business that went bankrupt in 1958. Julius Forstmann had inherited Forstmann Woolen Co. from his own father, one of the world's richest men. Forstmann was a graduate of Greenwich Country Day School
Greenwich Country Day School
The Greenwich Country Day School is a co-educational, independent day school in Greenwich, Connecticut, founded in 1926. As of 2005, it has some 840 students from nursery to the 9th grade level....
and Phillips Academy
Phillips Academy
Phillips Academy is a selective, co-educational independent boarding high school for boarding and day students in grades 9–12, along with a post-graduate year...
. He then played goalie on the ice hockey team at Yale University
Yale University
Yale University is a private, Ivy League university located in New Haven, Connecticut, United States. Founded in 1701 in the Colony of Connecticut, the university is the third-oldest institution of higher education in the United States...
where he was a member of Delta Kappa Epsilon
Delta Kappa Epsilon
Delta Kappa Epsilon is a fraternity founded at Yale College in 1844 by 15 men of the sophomore class who had not been invited to join the two existing societies...
fraternity. Forstmann later attended Columbia Law School
Columbia Law School
Columbia Law School, founded in 1858, is one of the oldest and most prestigious law schools in the United States. A member of the Ivy League, Columbia Law School is one of the professional graduate schools of Columbia University in New York City. It offers the J.D., LL.M., and J.S.D. degrees in...
where he earned a juris doctrate, which he financed through gambling proceeds.
Forstmann Little & Company
Forstmann, an attorneyLawyer
A lawyer, according to Black's Law Dictionary, is "a person learned in the law; as an attorney, counsel or solicitor; a person who is practicing law." Law is the system of rules of conduct established by the sovereign government of a society to correct wrongs, maintain the stability of political...
, founded Forstmann Little in 1978 with his younger brother Nicholas
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 William 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...
. Forstmann's second brother, J. Anthony Forstmann, founded ForstmannLeff
ForstmannLeff
FoirstmannLeff Associates is an institutional money management firm. It was cofounded by by J. Anthony Forstmann and Joel B. Leff in 1968. The firm is also known as one of the original hedge funds in the US...
.
Under Forstmann's leadership, Forstmann Little & Company made 31 acquisitions and significant investments and returned more than $15 billion of profits to investors. In addition to IMG, some of the firm's investments 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...
, Dr. Pepper, The Topps Co., Stanadyne Corp., Community Health Systems
Community Health Systems
Community Health Systems Inc. is a Fortune 500 company based in Franklin, Tennessee. It is the largest non-urban provider of general hospital healthcare services in the United States in terms of number of acute care facilities. As of May 2009, it operates 120 hospitals in 28 states. After...
, Ziff Davis
Ziff Davis
Ziff Davis Inc. is an American publisher and Internet company. It was founded in 1927 in Chicago by William B. Ziff, Sr. and Bernard G. Davis. Throughout most of its history, it was a publisher of hobbyist magazines, often ones devoted to expensive, advertiser-rich hobbies such as cars,...
, Yankee Candle, General Instrument Corporation, and most recently, Citadel Broadcasting
Citadel Broadcasting
Citadel Broadcasting Corporation was a Las Vegas, Nevada-based broadcast holding company. Citadel owned 243 radio stations across the United States and was the third-largest radio station owner in the country...
and 24 Hour Fitness.
Critic of junk bonds
Forstmann was featured prominently in the book Barbarians at the Gate: The Fall of RJR NabiscoBarbarians 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...
, as he and his company attempted 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...
. In the subsequent film adaptation
Barbarians at the Gate (film)
Barbarians at the Gate is a television movie based upon the book by Bryan Burrough and John Helyar, about the leveraged buyout of RJR Nabisco.The film was directed by Glenn Jordan and written by Larry Gelbart. It stars James Garner as F...
, he was portrayed by actor David Rasche
David Rasche
-Early life and career:Rasche was born in St. Louis, Missouri. His father was a minister and farmer. Rasche started in theatre, but also has appeared on numerous movies and television series. He became a member of the Chicago Second City, after John Belushi moved on to Saturday Night Live...
. The book portrayed Forstmann as a critic of KKR's
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...
Henry Kravis
Henry Kravis
Henry R. Kravis is an American businessman and private equity investor. He is the co-founder of Kohlberg Kravis Roberts & Co., a private equity firm with over $62 billion in assets as of 2011. He has an estimated net worth of $3.7 billion as of September 2011, ranked by Forbes as the 88th richest...
and his investment methods.
Forstmann's criticism of Kravis (and much of the rest of the financial industry during the 1980s) centered on the issuance of high yield "junk" bonds to finance mergers and acquisitions. (Forstmann referred to junk bonds as "wampum") When the junk bond market later fell into disfavor as a result of scandal, Forstmann's criticism was seen as prescient, as his more conventional investment strategy had been able to maintain nearly the same level of profitability as companies such as KKR and 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...
that built their strategy around high-yield debt
High-yield debt
In finance, a high-yield bond is a bond that is rated below investment grade...
.
Credit crisis
Forstmann accurately predicted the worsening of the credit crisis in July 2008, when most pundits believed the crisis had reached its peak. Forstmann argued that the excess of money pumped into the economy after the September 11 attacks in 2001 distorted the decision-making abilities of nearly everyone in finance. With an oversupply of money, bankers and other financiers took on more risk with less return. While this allowed many to make money for a time, eventually this risk accumulated, and the consequences led to the credit crisis.Civic life
In 1995 Forstmann was given the "Patron of the Arts Award" by the National Academy of Popular Music at the Songwriters Hall of FameSongwriters Hall of Fame
The Songwriters Hall of Fame is an arm of the National Academy of Popular Music. It was founded in 1969 by songwriter Johnny Mercer and music publishers Abe Olman and Howie Richmond. The goal is to create a museum but as of April, 2008, the means do not yet exist and so instead it is an online...
induction ceremonies.
Forstmann dedicated significant personal resources to the cause of education reform. He was a prominent supporter of school choice
School choice
School choice is a term used to describe a wide array of programs aimed at giving families the opportunity to choose the school their children will attend. As a matter of form, school choice does not give preference to one form of schooling or another, rather manifests itself whenever a student...
. In 1998 he and friend John T. Walton
John T. Walton
John Thomas Walton was a decorated United States war veteran and a son of Walmart founder Sam Walton. He was also the chairman of True North Partners, a venture capital firm...
established the Children's Scholarship Fund
Children's Scholarship Fund
The Children's Scholarship Fund is a privately-funded tuition assistance program in the United States. The fund allows low-income children to attend private schools. Almost 25,500 students in Kindergarten to 8th Grade receive the fund's scholarships. It was founded in 1998 by Theodore J. Forstmann...
to provide tuition assistance for low-income families wanting to send their children to private school.
In February 2011, Forstmann became a signatory of The Giving Pledge
The Giving Pledge
The Giving Pledge is a campaign to encourage the wealthiest people in the United States to make a commitment to give most of their money to philanthropic causes...
.
He was an active member of the Republican Party.
Personal life
In December 2006, newspaper reports on the inquiry into the death of Diana, Princess of WalesDiana, Princess of Wales
Diana, Princess of Wales was the first wife of Charles, Prince of Wales, whom she married on 29 July 1981, and an international charity and fundraising figure, as well as a preeminent celebrity of the late 20th century...
alleged that U.S. intelligence agencies had bugged Forstmann's phone or plane and monitored his relationship with Diana. She and her sons were said to have planned to visit him in summer 1997, but British security reportedly blocked the visit over security concerns related to the bugging.
In May 2011, Forstmann was diagnosed with brain cancer and received treatment at the Mayo Clinic.
Forstmann had two children: Everest and Siya, both adopted from South Africa.
Forstmann died on November 20, 2011 due to complications from brain cancer. He had a net worth of US$
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
1.6 billion as of 2011.
See also
- Forstmann Little — private equity firm, Ted Forstmann was one of the founders
- IMGIMG (business)IMG, originally known as the International Management Group is a global sports and media business headquartered in New York City.-History:...
— sports agency and management firm In which Forstmann was an investor.
External links
- "The Inside Story of Ted Forstmann's Wild Ride at Gulfstream" - 1997 BusinessWeekBusinessWeekBloomberg Businessweek, commonly and formerly known as BusinessWeek, is a weekly business magazine published by Bloomberg L.P. It is currently headquartered in New York City.- History :...
article on Forstmann's transformation of Gulfstream Aerospace - "A Latter-Day Warbucks, Helping Children" - 1999 New York Times article on Forstmann's efforts to improve education by giving school choice
- 2005 Forbes 400 entry
- 2008 Forbes 400 entry
- "Goodbye to All That" - 2004 New York Times article on Forstmann's planned retirement in 2006.
- Ted Forstmann's Bio