Thomas Hicks, the co-founder of Texas buyout firm Hicks Muse Tate & Furst, today informed investors that he will step down as chairman of the firm on March 31, 2005, and leave management of the firm to co-founders John Muse, Jack Furst and ‘rising star’ partner, London-based Lyndon Lea.
Upon Hicks’ retirement, partner and co-founder Muse, now based in Dallas, will become chairman of the firm. Muse, Furst and London-based partner Lea will comprise the ongoing management committee of Hicks Muse, according to a letter to investors.
Hicks’ impending retirement signals one of the few management successions to have been announced at a major US private equity firm. In recent years, limited partners have voiced concern that private equity franchises are being run by founders who may be distracted by personal affairs but unwilling to give greater ownership of their firms to junior partners.
Hicks Muse has gone through major change since the firm first started encountering telecom- and tech-induced headaches in 2001. That year, the firm closed its New York office, announced the resignation of New York partner Michael Levitt and scaled back Latin American operations.
The following year, co-founder Charles Tate announced his resignation from the firm.
In his letter, Hicks reviews the investment successes he has enjoyed since he sponsored his first buyout in 1977 with friend Louis Marx – the $4 million (€3.2 million) acquisition of Atlas Architectural Metals, a Dallas company. In 1983, Hicks co-founded buyout firm Hicks & Haas, then partnered with Muse in 1989. In 1994, Hicks Muse Tate & Furst was incorporated.
“. . . [A]s I approach my sixtieth birthday in early 2006, I have found it, frankly, increasingly difficult to find enough time to be with my family; to pursue with them our shared interest in our significant family investments in the Texas Rangers baseball team, the Dallas Stars hockey team” and sports venue and real estate holdings, Hicks wrote in the letter.
Hicks noted that Hicks Muse – which will continue to bear his name – will soon modify “staff compensation arrangements to align even more strongly the interests of our London-based colleagues” with investors in the firm’s European funds.
Hicks wrote Lea “has emerged as one of our rising stars.”
Lea, who joined the firm six years ago, spent four years at Glenisla, a European affiliate of New York-based Kohlberg Kravis Roberts. Before that, he was an associate at Schroders’ investment bank in London. Lea hails from Canada.
The firm recently launched its second European fund with a target of €1 billion.
Hicks Muse launched a ‘back-to-basics’ effort after a series of disastrous investments in telecom and Internet companies like Rhythms NetConnections. Hicks noted that these investments were ‘off message,’ but pointed to the recent exits of portfolio companies Yell (a yellow-pages publisher) and Pinnacle (a pickle maker) as evidence that the firm had returned to the ‘rigorous investment discipline’ on which it was originally built.