Forstmann Little, the New York buyout house infamous for having been sued by the state of Connecticut, has lost a lot of dealmakers this year. In May Sandra Horbach left to take up a new role as head of consumer and retail at The Carlyle Group. Earlier this week Gordon Holmes joined New York’s Quadrangle Group as a managing principal. And Tom Lister recently left to take up a new role heading up the New York office of European buyout firm Permira.
That a veteran dealmaker like Lister – he joined Forstmann in 1993, and was made a partner three years later at the age of 32 – should be managing the New York office of a firm that is adamant it isn’t interested in US companies may at first seem a little strange. However, Lister says that he’ll still be involved in the cut and thrust of sourcing and executing deals: they simply won’t involve US companies.
“Permira is not interested in competing for US-only buyouts,” he says. “It is a hotly contested market where we don’t have an important competitive advantage. But this role is an opportunity to source companies with significant European content and international operations out of the US. I’ve been in this business in the US for thirteen years, and I believe I can help Permira with this mandate.”
As an example of the kind of opportunity he’ll be on the look out for, he cites the firm’s investment in Intelsat. Permira acquired the satellite operator as part of a consortium including Apollo Management, Madison Dearborn and Apax Partners in a $3 billion deal in late 2004. Although the company has its corporate headquarters in Washington DC and the deal was sourced for Permira by the firm’s New York team, Intelsat was founded following intergovernmental agreements in 1964’s and the company’s business is – quite literally – global.
As well as sourcing deals Permira’s New York team, which Lister’s arrival brings to five, provides an “on the ground” capability with which to advise portfolio companies on acquisitions, disposals, and business opportunities in the North American market. It also, from a marketing point of view, gives Permira the profile of a global firm – something that could be invaluable if, as expected, the firm comes back to market to raise a fourth fund next year.
But while Lister may be hoping that his arrival heralds a bright new era for Permira, he claims that his or his former colleagues’ departures from Forstmann Little do not mean that his former firm is in its end days. Instead he points to some relatively recent investments for the firm, such as its $750 million buyout of sports marketing and lifestyle management firm IMG in October 2004 and last May’s $1.6 billion acquisition of 24 Hour Fitness. “I wouldn’t say it was winding down but rather working to maximize the value of its excellent existing portfolio. Teddy is very focused on building great companies and will produce results that are as strong if not stronger than what he has in the past with these businesses – I can’t see him ever winding down.”