When eponymous co-founder Tom Hicks announced his decision in March that he would step down in 2005 to spend more time with his family – “to pursue with them our shared interest in our significant family investments in the Texas Rangers baseball team and the Dallas Stars hockey team” – it seemed likely that this would be the biggest firm news of the year. However, the recent announcement of a wide-ranging change in the firm's compensation structure (apparently at the behest of its limited partners) means that Hicks' sports-watching intentions have been elbowed off centre stage in the news stakes.
Despite the immediate conclusion reached in certain quarters that realigning carry structures so that the European team receives almost all of the carry from European exits meant that a spin-off of the European business was inevitable, the firm has repeatedly denied that any such move is in the offing.
The carry split has ensured a clear diversification of what happens in the US and Europe. Previously, members of the firm's US investment team were entitled to a share of the carry arising from European exits and vice versa, but going forward the European team will earn around 93 percent of the profits from all European-based transactions.
The increased European focus comes as Hicks Muse continues with its fundraising efforts for the €1 billion Europe Fund II, following on from the 1999 €1.5 billion Europe Fund I. Alongside London-based partner Lyndon Lea – described by Hicks in his resignation announcement as “a rising star” – cofounder John Muse has also recently moved to the London office. Muse is the only partner with a continuing interest in both the European and US arms of the business. The firm also recruited Neil Richardson as a partner from rival Kohlberg Kravis Roberts to work alongside Lea in the London office.
The carry separation, which investors reportedly believed would provide a better model than the previous everyonesharing- everything format, may inspire not only the European arm of the business. Earlier this month, the Dallas-based office acquired Kerns Oil & Gas, a natural gas production company for an undisclosed sum. Healthy internal competition may be no bad thing for Hicks, Muse, Tate & Furst…
Hicks, Muse, Tate & Furst is an international private equity firm that specialises in leveraged buyouts of established operating companies, which are frequently developed into platforms for synergistic add-on acquisitions. Hicks Muse focuses its investments on a variety of industry sectors including media, advertising, manufacturing and food and consumer branded products. The firm was founded in 1989 and is headquartered in Dallas, Texas. Additional offices are located in New York, London and Buenos Aires.
Thomas Hicks, Chairman, founder, CEO (retiring early 2005)
John Muse, President, founder & Chairman-elect
Jack Furst, Chief Operating Officer
Lyndon Lea, Partner, head of European office
|Size ($m)||Date raised||Stage|
|Hicks, Muse, Tate & Furst European Partners|
|Hicks, Muse Europe Private Equity Fund II, L.P.||–||2003||Launched|
|Hicks, Muse Europe Private Equity Fund, L.P.||1500||1999||Final close|
|Hicks, Muse, Tate & Furst Equity Fund|
|Hicks, Muse, Tate & Furst Equity Fund V, L.P.||1600||2000||Final close|
|Hicks, Muse, Tate & Furst Equity Fund IV, L.P.||4100||1998||Final close|
|Hicks, Muse, Tate & Furst Equity Fund III, L.P.||2540||1996||Fully invested|
|Hicks, Muse, Tate & Furst Equity Fund II, L.P.||800||1993||Fully invested|
|Hicks, Muse, Tate & Furst Equity Fund, L.P.||270||1989||Fully invested|
|Hicks, Muse, Tate & Furst Latin American Fund|
|Hicks, Muse, Tate & Furst Latin American Fund II, L.P.||150||2001||Final close|
|Hicks, Muse, Tate & Furst Latin American Fund, L.P.||964||1998||Fully invested|