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Forstmann, Little & Company
Type Private ownership
Fate Failed fundraising / Liquidation of investment portfolio
Founded 1978
Founder(s) Ted and Nick Forstmann and Brian Little
Headquarters United States New York, New York
Industry Private equity
Products Leveraged buyout, Growth capital

Forstmann, Little & Company is a private equity firm, specializing in leveraged buyouts (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.

History

The company was founded in 1978 by brothers Ted and Nick Forstmann, and Brian Little. With the deaths of Brian Little and Nicholas Forstmann in 2000 and 2001, respectively, Ted Forstmann is 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, 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.

See also

External links

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