April 30 (Bloomberg) -- Asked about a first in his career, Thomas H. Lee answered immediately: “First IPO of an LBO, Guilford Industries in 1983.”
That’s cocktail conversation for you at the UJA-Federation’s Private Equity Recognition Event, which last night honored Lee’s four decades of buying and expanding companies with a cooperative style that has always set him apart from his “corporate raider” peers.
“I first worked with him in 2003, when we bought the Warner Music Group together,” Edgar Bronfman Jr., general partner at Accretive LLC, said in his introduction of Lee. “In Tom I found a kindred spirit, along the lines of the philosophy: You don’t have to win if you get everything you want. Let the other party have the social and press victories. Tom always focused on the business outcome for his investors, not his personal profile.”
Lee in his remarks called owning a company in America “an honor and a privilege” and a “huge responsibility,” as “people and assets are depending on you. We think a lot about that, believe me. When we buy a company we don’t do it lightly.”
As for how he’s managed to stay on his game for so long: “When vocation and avocation become one, then you’re in a very good position,” Lee said near the sushi buffet. “I could say I never worked a day in my life.”
AutoTote to Pizza
Lee started making private-equity investments in 1974. He founded and led Boston-based Thomas H. Lee Partners until 2006, when he formed New York-based Lee Equity Partners.
An A to Z of his resume associates him in one way or another with AutoTote in the 1970s, General Nutrition Cos. in the 1980s and Snapple Beverage Corp. in the 1990s. In the oughts he became involved with American Media Inc., the company that owns the National Enquirer, Papa Murphy’s, the take-and-bake pizza chain, now in the roadshow phase of a public offering -- and Deb Shops, a junior fashion retailer currently selling a tank top with the slogan, “Dream All Day, Dance All Night and Eat Pizza.”
In 2012, Lee took the Edelman Financial Group private.
The wealth management firm has $12 billion in assets, with 24,000 clients and 400 total staff, said CEO Ric Edelman during the reception.
“Edelman serves what we call the mass affluent,” Lee said. “You have some money but not a huge amount.” The company builds portfolios for customers in a series of ETFs that mimic a pension fund. It’s done in liquid securities, with computers rebalancing accounts, and every customer has a planning officer. The minimum account size is $5,000.
Edelman said Lee understands his business is about “relationships beyond all else.”
“He took us all to dinner at Quality Meats, where he’s an owner, and he quickly becomes the maitre d’ -- because he knows everybody there, not just the patrons but the staff,” Edelman said. “He really knows how to make people feel at ease.”
“I always kind of call him my rabbi,” said David Wasserman, a friend and the principal of Wasserman Real Estate Capital LLC.
A customized, rapid-fire song after Gilbert & Sullivan might have served to recap Lee’s career in the setting of a fundraising event.
Instead Lee, ever the Borscht Belt-style yukster, regaled guests with a joke about the first buyout.
The scene: the man’s office, where he’s just given his son-in-law the stock certificate for 40 percent ownership in his company.
The son-in-law asks, what he should do in the company.
The man suggests sales.
“Sales? That’s not right for me.”
What about manufacturing, the man suggests.
“Manufacturing? It’s dirty in a factory, it’s oily, someone could get hurt on the machines,” Lee said, getting the son-in-law whine just right.
The son rejects the idea of going into accounting too. “With the musty old bookkeepers and the dusty books,” the son-in-law replies. “I’ll get a bad migraine and my marriage will suffer.”
“So the man says, why don’t you buy me out? That’s how it happened, the first buyout.”
The event raised $1.1 million for UJA’s support of almost 100 agencies providing a range of services from job training to meals for the poor to summer camp for recent Russian immigrants.
The UJA’s private-equity division was founded four years ago, out of the investment management unit, under the umbrella of the Wall Street and financial-services division.
KKR & Co.’s Marc Lipschultz, who was not present last night, and David L. Moore of Moore Holdings serve as chairmen of the group, which began presenting its Jack Nash Award last year, named after the late hedge-fund pioneer. Its first recipient was Jack Nash’s son, Joshua Nash of Ulysses Management.
Lee is a father to five children, the first two raised in Boston with his first wife, Barbara Lee, who promotes women for elected office, and the next three raised in New York, where he lives with his second wife, Ann Tenenbaum, chairman of Film Society of Lincoln Center, and co-founder of record label Wolfbomb Productions.
It’s a privilege “to love someone and have them love you and take care of them and they take care of you for the rest of your life,” he said of Tenenbaum.
One of the things his wife has to put up with: he’s a professional hypochondriac. “I haven’t told you about my gravestone,” Lee said. “It’s going to say, I told you I was really sick.”
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