Theodore Forstmann, 1940–2011
The pioneer of private equity
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.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
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.”
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Create an account with the same email registered to your subscription to unlock access.
-
Georgia's new foreign influence bill
Under the Radar Critics claim the 'Russian law' could stifle dissent and wreck the country's chances of joining the EU
By Elliott Goat, The Week UK Published
-
'Making a police state out of the liberal university'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published
-
8 looming climate tipping points that imperil our planet
The Explainer New reports detail the thresholds we may be close to crossing
By Devika Rao, The Week US Published
-
Benjamin Zephaniah: trailblazing writer who 'took poetry everywhere'
Why Everyone's Talking About Remembering the 'radical' wordsmith's 'wit and sense of mischief'
By The Week UK Published
-
Shane MacGowan: the unruly former punk with a literary soul
Why Everyone's Talking About The Pogues frontman died aged 65
By The Week UK Published
-
'Euphoria' star Angus Cloud dies at 25
Speed Read
By Catherine Garcia Published
-
Legendary jazz and pop singer Tony Bennett dies at 96
Speed Read
By Devika Rao Published
-
Martin Amis: literary wunderkind who ‘blazed like a rocket’
feature Famed author, essayist and screenwriter died this week aged 73
By The Week Staff Published
-
Gordon Lightfoot, Canadian folk legend, is dead at 84
Speed Read
By Peter Weber Published
-
Barry Humphries obituary: cerebral satirist who created Dame Edna Everage
feature Actor and comedian was best known as the monstrous Melbourne housewife and Sir Les Patterson
By The Week Staff Published
-
Mary Quant obituary: pioneering designer who created the 1960s look
feature One of the most influential fashion designers of the 20th century remembered as the mother of the miniskirt
By The Week Staff Published