HICKS, MUSE, TATE & FURST

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…

SNAPSHOT:
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.

MANAGING PARTNERS:
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

FUND FAMILIES

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