Theodore Forstmann, 1940–2011

It was on the golf course that Ted Forstmann inadvertently coined the term for which he became best known. His partner in a game in the late 1980s asked what it meant for a company to be taken over by a buyout firm. “It means the barbarians are at the gates,” said Forstmann. The term entered Wall Street lore, becoming linked to the private equity industry that Forstmann pioneered and flourished in.

But Forstmann was hardly a barbarian. He was “raised in affluence” in Greenwich, Conn., said the Los Angeles Times, and studied at Yale and Columbia Law School. After working on Wall Street for several years, he founded Forstmann Little in 1978, which quickly became “one of Wall Street’s most successful specialists in leveraged buyouts”—corporate acquisitions financed mainly by borrowed money, which is repaid with funds from either the company’s cash flow or asset sales. Forstmann’s private equity firm would go on to turn around such corporate giants as Dr Pepper, Gulfstream Aerospace, and IMG.

Forstmann was famous not just as a financier but also as a “regular boldface name in the gossip pages,” said The New York Times. He had a “brief romantic relationship” with Diana, Princess of Wales, and was linked to actress Elizabeth Hurley and Top Chef presenter and model Padma Lakshmi. He never married, but adopted two orphaned children from South Africa.

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Education reform was Forstmann’s special passion, said The Wall Street Journal. In 1998, he and fellow financier John Walton started the Children’s Scholarship Fund, a charity that raises private funds to give scholarships to underprivileged children whose parents are willing to pitch in toward tuition. The initial response “entered the realm of legend,” with 1.25 million applications in the first year. The CSF has since raised $483 million, given scholarships to 123,000 students, and thrust reform of America’s “failing inner-city schools” into the spotlight.

Never a technocrat, Forstmann credited his success in business to his creativity. “I never went to business school, I was basically never in an investment firm worthy of mentioning,” he said. “I’ve always been a guy who had ideas.”