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Many of Forstmann’s competitors made bets on telecom and Internet-related investments. Between 1997 and 2000, Dallas-based Hicks, Muse, Tate & Furst lost $1.5 billion. But none of these investments were quite as dramatic as Forstmann Little’s combined investments in XO and McLeod. “It’s like suddenly he showed up at the office with purple hair and sandals,” says the competitor. “And now the state of Connecticut is saying, ‘Hey, wait a minute, last time we saw you, you were wearing a suit.’ ”

Along with Kohlberg Kravis Roberts & Co., Forstmann Little figured out a way to produce massive wealth by buying companies with money borrowed against the company’s assets, paying down the interest with operating revenues. (“The L in LBO is what makes it so profitable,” Forstmann once explained to me.) Eventually these firms started filling their war chests with funds borrowed from large institutional investors like state pension funds. During the great leveraged-buyout boom of the eighties, Forstmann’s outsider image was certified by his opposition to the use of junk bonds—he himself uses a less precarious form of leverage, drawn from his own investors, called subordinated debt. He was famously involved in two of the big takeover battles of the era, for Revlon, eventually seized by Ron Perelman with the help of junk-bond king Michael Milken, and for RJR Nabisco, acquired by Henry Kravis. In the HBO movie of the book Barbarians at the Gate, Forstmann is portrayed as something of a raving lunatic, dressed as an American Indian at a charity benefit, railing against the use of “wampum” and “funny money.” But it was Forstmann who seems to have supplied the book’s title. In the midst of the takeover battle for RJR, he ran into Richard L. Gelb, then the chairman of Bristol Myers, on the golf course of Long Island’s Deepdale country club and tried to explain the brave new world of leveraged buyouts, junk bonds, and hostile takeovers. Gelb, an old-school CEO, found it all very confusing. “What does it all mean?” he asked. “It means,” Forstmann replied, “the barbarians are at the gate. And they’ll be coming for you next.” (One wonders if the co-inventor of leveraged buyouts counted himself among the Visigoths.) The history of both the RJR and Revlon transactions would seem to have validated Forstmann’s arguments about excessive leverage without necessarily improving his image among his peers.

The fact that Forstmann has never married, that, unlike Kravis or Thomas H. Lee, the other horseman of the LBO triumvirate, he has never integrated himself into the Park Avenue benefit scene, which is the realm of wives, also separates him from his peers. He has been linked with Elizabeth Hurley, and escorted Princess Diana to several high-profile events; he was twice engaged to longtime girlfriend Deborah Hagerty, who seems to have been the great love of his life, but the engagement was eventually called off. He gave her a Matisse as a parting gift. (She has since married.) I happened to run into him after his appearances with Diana had been in the gossip columns, and he told me that she was very eager to pursue a relationship—although he admitted that his wealth and its trappings were probably part of his allure—but he was deeply involved with Hagerty at the time. He told me that he’d reluctantly aborted the romance with the demanding princess. Though I can’t verify his claim, I found it intriguing that he told me, and they remained mutual confidants until her death.

By his own admission, he’s not a joiner. He drives a golf cart around the course at Shinnecock, in violation of an unwritten but cherished tradition of pedestrianism. Even in the matter of his extensive philanthropy, he goes his own way, eschewing the traditional big Manhattan charities like the Met and the Public Library. He raised millions for Bosnian medical relief, and rode into Mostar with a convoy to help deliver it. In the mid-nineties, he largely funded the Silver Lining Ranch, a camp in Aspen for children with cancer, which is run by former tennis star Andrea Jaeger. In 1998, he co-founded the Children’s Scholarship Fund, which has so far distributed $180 million in scholarships for private education to underprivileged children, with $50 million of his own cash, an initiative which has drawn fire from some liberals who worry that he is undermining the public-school system. A fierce competitor on the tennis court, he hosts a fund-raising tournament, called the Huggy Bear, at his Southampton Estate each summer, the proceeds of which go to a variety of children’s charities.

Less well-known is that in the mid-nineties, Forstmann adopted two South African children after visiting Mandela, who asked him to give a talk on capitalism to the South African parliament and has since become a friend. The boys, Everest and Siya, never appeared at the trial in Connecticut, though a really cynical defense team might have gambled that their presence might have humanized the imperious tycoon.

It’s doesn’t take a psychiatrist to notice the pattern in Forstmann’s philanthropy, focused as it is almost exclusively on ill and underprivileged children. He has cultivated enduring friendships with some of them, including an 18-year old neuroblastoma victim from the Silver Lining Ranch named Anna O’Connor, who spent the weekend following the conclusion of the trial with him in Southampton along with her parents. I wonder if he’s better with children than with adults. Forstmann, the second son in a family of six children, had an ostensibly privileged childhood in Greenwich, Connecticut, although he describes it to his friends as anything but idyllic. “I was an extremely unhappy child,” he told me recently. “I went back to Andover a few years ago to see a teacher. At one point I said, ‘Tell me the truth. What did you think of my chances back then?’ And he said, ‘Honestly, I thought you wouldn’t make it to 30, with all that you were dealing with.’ ” Forstmann still has an air of tortured insecurity, although it reads as arrogance. He often dominates a gathering, preferring the role of host to guest, but he never seems particularly comfortable in a social setting. His smile is strangely unconvincing, his mouth failing to involve the rest of his face—as if he were still, at the age of 64, trying to master that particular basic expression. It doesn’t sound as if he had much practice as a child. His paternal grandfather, a German immigrant, made a fortune in woolen manufacturing. This awe-inspiring, 300-pound, devoutly Lutheran patriarch disapproved of his son Julius’s marriage to Dorothy Sammis, an Italian-American Catholic.

Teddy’s father was troubled, mercurial, and sometimes violent, struggling for most of his life with alcohol and depression. He was frequently institutionalized. According to one family friend, Dorothy openly favored Teddy’s older brother, Tony. “She’d go to Tony’s games but not to Teddy’s,” the friend says. “Tony was definitely number one,” Teddy confirmed to me recently, “and I was definitely number two.” Teddy’s younger brother, Nicky, who would later become his business partner, also enjoyed a closer and more affectionate relationship with their mother.

Nicky Forstmann was his brother’s temperamental opposite—extroverted, self-effacing, and easygoing. The word sweet is inevitably used when Nicky’s name is invoked. Several of the big Wall Street players I contacted for this story became audibly emotional after his name came up. If Teddy was the prime mover in Forstmann Little, founding partner Brian Little, who retired in 1994, had the investment-banking background that helped Forstmann implement his ideas. Nicky, who tended to defer to his older brother, was, among other things, the diplomat, the smiling, boyishly handsome face of Forstmann Little, the one who smoothed some of the feathers that Teddy ruffled. Unlike his brother, Nicky was a man who knew how to smile with his entire face.

(I got to know Nicky and his wife, Lana Wolkonsky, a concert pianist, through my ex-wife, who was a close friend, and I found him to be generous, cultured, and enviably well-rounded compared to most of his peers. After dinner with Nicky, I used to make all kinds of ambitious self-improvement pledges.) Nicky Forstmann died of lung cancer in February 2001, his death more or less coinciding with the financial setbacks that ultimately brought his brother to court in a small town twenty miles east of Hartford.

During the breaks in the trial, with the jury dismissed, you caught glimpses of Forstmann’s pain at finding himself, in the latter days of a spectacularly successful career, having to defend not only his judgment but his honor. Forstmann generally has a hard time suppressing the conviction that he’s smarter than the rest of us, but in the end, I think what is far more important to him is his sense of his own integrity and decency. He was outraged to find it under attack. “Can you believe this?” he muttered to me after a particularly combative cross-examination of one of his partners. “This is unconscionable.” At another break, he said, “This is a nightmare. It’s like being in a Kafka novel.” Observing his angry magenta face, I thought of Lear howling in the rain.


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