Forstmann, Lee, Bain in talent deals

The stars are aligning - in separate deals, Forstmann Little and a duo comprised of Thomas H. Lee Partners and Bain Capital have made major investments in marketing talent-management businesses, IMG and the Firm, respectively.

Forstmann Little & Co., the New York buyout giant, has agreed to acquire IMG, a sports and talent marketer, for a reported $750 million (€604 million) in cash. In a separate, similar deal, Boston private equity firms Thomas H. Lee Partners and Bain Capital will reportedly buy a minority stake in the Firm, an entertainment, sports and lifestyle marketing firm.

The IMG deal is Forstmann Little’s first major deal since 2000, when its investments in telecom companies XO Communications and McLeodUSA began to unravel. The firm recently settled a breach of contract lawsuit with an LP, the Connecticut state treasurer, stemming from the investments.

IMG is one of the top managers of the careers of athletes and entertainers, from golfer Tiger Woods to actress Elizabeth Hurley. The company also produces sports television programmes through a division called TWI, which has a library of more than 150,000 hours of television programming, according to a press release. The company has estimated annual revenue of $1 billion.

IMG was founded in the 1960s by Mark McCormak, who died last year.

In a statement, Ted Forstmann, founder of Forstmann Little, said his firm would not use bank debt in the acquisition. “Forstmann Little has never used public debt to make any of our investments,” he said.

Robert Kain and Alastair Johnston will continue to serve as co-presidents and co-chief executive officers of IMG.

The Forstmann Little press release noted: “Prior to the IMG acquisition, the firm had approximately $2.2 billion in committed capital for future investments.”

In related news, Thomas H. Lee’s and Bain Capital’s investment in the Firm brings private equity dollars to yet another talent-focused business. The Firm manages many film stars and recording artists. Thomas H. Lee is already a part owner of Warner Music Group, which was bought out of Time Warner.

Rich Frank, the Firm’s chairman, reportedly said the private equity investment would be the beginning of a series of acquisitions in the entertainment industry.

A number of private equity firms have grown interested in the opportunities of entertainment assets as digital technology opens up new, lucrative distribution channels.