Before that, there was Thomas H. Lee and the company that bore his name.
Lee, the billionaire whose most famous transaction was a 334% return on equity from his 1992 purchase of Snapple Beverage Corp., died at his office in New York at the age of 78. head, Julie Bolcer, a spokeswoman for the New York City Office of the Chief Medical Examiner, said in an email.
Grief spread quickly among those on Wall Street who knew him best. Todd Abbrecht and Scott Sperling, co-chief executive officers at Lee’s former company, now known as THL, remember him as a “generous and friendly individual.” At Lee Equity Partners’ New York office, a woman on the phone cried as she said the firm declined to comment on his death.
Using $150,000 from an inheritance and a loan from his brother, he started Boston-based Thomas H. Lee Partners in 1974 and ran the firm until 2006.
Lee parted ways with his namesake company that year and left to start a new company, Lee Equity. He didn’t take his name.
Through both companies, Lee invested more than $15 billion in hundreds of deals by 2020. This included the famous Snapple deal.
The company bought Snapple in 1992 for $135 million, investing only $28 million of its own money. Lee then flipped to Quaker Oats Co for $1.7 billion two years later after boosting annual revenue from $95 million to $750 million.
Snapple’s return on equity was 334% after his company took in $927 million from the sale, according to a 1997 Forbes profile. With that kind of profit, in 2022, Lee will be worth $2 billion, according to Forbes.
‘Iconic Figures’
Lee, who is often seen chewing a cigar in the office, has a private equity approach to targeting mid-cap companies with growth potential that have revenues of $300 million to $3 billion. One of my favorite aphorisms is: You’re better off paying a high price for a great company than getting a great company at a low price.
Using that philosophy, one of his early successes was the 1985 acquisition of Sterling Jewelers in Akron, Ohio. Other deals at his first company included General Nutrition Cos. in 1989.
In 2005, he partnered with another private equity firm to buy Dunkin’ Brands, which franchises Dunkin’ Donuts and Baskin-Robbins ice cream shops, for $2.4 billion.
Investment formula
Lee stuck to his basic investment formula when he started Lee Equity. Invested in Deb Shops, a junior fashion retailer, took Edelman Financial Group private in 2012 and made a big bet on Papa Murphy’s International, a take-and-bake pizza chain.
Lee is often out of the spotlight when it comes to deals, according to Edgar Bronfman Jr., who worked with Lee to buy Warner Music Group in 2004.
Lee’s philosophy is: You don’t have to win if you get everything you want. Let other parties have social and press victories.
“Tom has always focused on business results for investors, not his personal profile,” Bronfman told Bloomberg in 2014.
There were some flubs along the way, which Lee usually pointed out to potential investors when making a pitch on a new deal. Invested $500 million in 1999 in insurance company Conseco Inc.
Lee’s company also surprised by its $507 million investment in Refco Inc., a U.S. futures and commodities brokerage firm. Refco filed for bankruptcy protection after it was revealed in 2005 that its chief executive had hidden $430 million in debt for years.
Outside of work, Lee is an avid art collector, owning works by artists including Willem de Kooning and Jackson Pollock and serving as a trustee of Lincoln Center and the Museum of Modern Art, according to Forbes.
Lee was born in Washington, to Herbert and the former Mildred Schiff. His father worked for the Shoe Corporation of America, which was founded by his father-in-law, Robert Schiff. Lee graduated from Harvard College in 1965 with a degree in economics.
Prior to his private equity career, he spent eight years at First National Bank of Boston, where he became a vice president in 1973, specializing in lending to technology companies.
His first wife was Barbara Fish. They divorced in 1995 after having two children, Zach and Robbie, in 27 years of marriage. He later married Ann Tenenbaum. They have three children: Jesse, Nathan and Rosalie.
Learn how to navigate and strengthen trust in your business with The Trust Factor, a weekly newsletter that examines what leaders need to succeed. Log in here.