Thomas H. Lee, pioneer of leveraged buyouts, is dead at 78

By Chris Isidore, CNN Business

Thomas H. Lee, a private equity financier who pioneered the use of leveraged buyouts that helped to reshape corporate America, has died, according to a notice from his former firm that still bears his name.

“We are profoundly saddened by the unexpected passing of our good friend and former partner, Thomas H. Lee,” said a statement from Thomas H. Lee Partners LP, the company he founded in 1974. “Tom was an iconic figure in private equity. He helped pioneer an industry and mentored generations of young professionals who followed in his footsteps.”

A senior law enforcement official told CNN a preliminary analysis suggests Lee, 78, died of a self-inflicted gunshot wound while at his Fifth Avenue offices on Thursday. Officials are waiting on the medical examiner to determine cause of death.

Lee was one of the leaders in the use of leveraged buyouts, or LBOs. In LBOs a buyer will borrow money to make a purchase, typically using the future earnings of the acquired company to pay off the loan. The goal is often to sell the company in a relatively short period for a higher price, either to another buyer or by taking it public.

One of Lee’s most famous, and lucrative, leveraged buyouts was his purchase of Snapple for $135 million in 1992. Lee sold it to a competitor, Quaker Oats, in 1994 for $1.7 billion. Quaker Oats soon after sold Snapple for just $300 million, a massive loss.

Unlike a lot of private equity companies, Lee’s firm didn’t have a reputation for making massive cost cuts, such as deep staff layoffs, to drive up the value of the company it acquired and boost its value before a sale. He was able to increase the value of Snapple before his sale to Quaker Oats mostly by growing the company and its sales, reportedly increasing revenue from $95 million a year to $750 million.

“He’s that rare thing on Wall Street — a genuinely nice guy,” said Forbes in a 1997 profile of him.

Lee left THL in 2006 and started another private equity firm, Lee Equity Partners. His bio on the firm’s site said over the last 46 years he has invested $15 billion of capital in hundreds of transactions.

Lee started in the business as an analyst in the institutional research department of L.F. Rothschild & Company. He then moved to First National Bank of Boston, where he rose to the position of vice president and led the high tech lending group at the bank. He founded Thomas H. Lee Partners in 1974.

Forbes estimated his net worth at the time of his death at $2 billion.

He also has also been active in philanthropy. According to his firm’s bio, he currently or in the past has served as trustee of Lincoln Center for the Performing Arts, the Museum of Modern Art, NYU Langone Medical Center, and the Whitney Museum of American Art, among other civic and charitable organizations.

“The family is extremely saddened by Tom’s death,” said family friend and spokesperson, Michael Sitrick, in a statement. “While the world knew him as one of the pioneers in the private equity business and a successful businessman, we knew him as a devoted husband, father, grandfather, sibling, friend and philanthropist who always put others’ needs before his own. Our hearts are broken.”

Editor’s Note: If you are in the US and you or a loved one have contemplated suicide, call the National Suicide and Crisis Lifeline at 988 or 1-800-273-TALK (8255) to connect with a trained counselor. Outside the US, a worldwide directory of resources and international hotlines is provided by the International Association for Suicide Prevention, and you can turn to Befrienders Worldwide.

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