Tom Hicks is known to most people for trading baseball’s best player to the New York Yankees, and for swallowing a good deal of that player’s salary in the process. To the private equity community, however, Hicks is known as a legendary professional who popularized the “buy-and-build” model of leveraged buyout investing.
Rather than keeping up this contradiction in business acumen, Hicks is hoping that everyone soon will know him as the savvy sports owner whose resume just happens to include over 30 years in the private equity markets. The 59-year-old has decided to retire from his chairmanship position at Dallas-based Hicks, Muse,Tate & Furst (HMTF) at the end of next March, at which point he will turn his full attention to his sports franchises and commercial real estate development effort.
“I had always kind of assumed that 65 was the age to retire at, but I really was thinking in terms of funds,” Hicks tells Buyouts. “We’re on Fund V right now and I thought that I’d stay [with the firm] through Fund VI, which will be raised next year, but last spring I began thinking that I might not want to do that.”
Hicks says that the change in heart is largely family-related, including the fact that his oldest child has begun to work with him on the Texas Rangers baseball franchise and Dallas Stars hockey franchise. He also hopes that a few of his six other children will follow suit, although he recognizes that he’ll likely only get a few.
Hicks co-founded HMTF 15 years ago with John Muse, after having served as president of First Dallas Capital Corp. between 1974 and 1977. He previously worked as an investment officer in the venture capital affiliate of Guaranty Trust Co. in New York. The firm has since completed approximately 400 transactions, including notable deals for Dr. Pepper/Seven Up, Yell Group and AMFM Communications, which later would be merged into Clear Channel.
The firm currently is investing out of a $1.6 billion vehicle raised in 2000, and is in the midst of raising a second European fund. Hicks says he will participate in Fund VI next year as a limited partner, although he does not expect HMTF to be targeting anywhere near the $5 billion and $6 billion recently raised by buyout shops like Texas Pacific Group and The Blackstone Group.
“The buyout market clearly has bifurcated a bit, and we’ve shifted to the middle and upper-middle market,” Hicks explains. “We looked back at the deals we’ve had the most success with, and that’s where we find them. We can’t be all things to all people.”
John Muse will succeed Hicks as chairman, while Jack Furst will remain as part of the three-person HMTF management committee. The remaining spot will be filled by, Lyndon Lea, who joined HMTF six years ago and heads up the firm’s growing European activities. Lea will not have his name added to the firm name.
In a letter to HMTF limited partners dated March 8, Hicks writes: “Following my retirement from HMTF next March, I will continue to be an investor in the firm, my name will continue to be on the door, and I will “root” for HMTF from the sidelines and help it however I can. But my primary focus will be on pursuing my new day job’ as a full-time sports team owner, real estate developer, and private family investor, partnering with members of my family and assisted by other professional staff.”