In a way, it was iced tea that made Tom Lee. It was 1992 and Lee was looking for a new opportunity. His private equity firm, Thomas H. Lee Partners (THL), was a well-established, respectable business with an investment preference for mid-cap companies with plenty of growth potential. Iced tea seller Snapple wasn’t the least expensive option on the market but Lee thought it had a lot of promise.
He settled on Snapple and purchased 63 million of the beverage company’s shares. In two years, he built it into a $750 million (in sales) company and, in 1994, sold it to Quaker Oats for $1.7 billion. THL made an impressive $997 million return on their initial $28 million investment and quickly became a legend in equity circles.
Founded in 1974, Lee founded THL and focused on purchasing companies through leveraged buyout transactions. Despite the somewhat sordid reputation that came with using this strategy to acquire companies in the 1980’s, Lee’s lower-key approach helped the company sidestep the “corporate raider” label that followed some of his contemporaries.
Early on, Lee was very hands-on with his investment deals but eventually began moving some of the decision-making to twelve of his most senior partners. Together, they sifted through 1,500 potential candidates to find the top three hundred that made the first cut. From there, they would cull the list down to fifty of the most promising contenders. Interestingly, Lee insisted that each of his partners put money into every deal. A $1.25 billion fund raised in 1995 saw an additional $125 million coming directly from the partners.
In 2006, Lee stepped down from the firm as part of a succession plan put into place after Putnam Investments bought 25 percent of THL five years prior. The parting of ways was friendly and Lee moved to New York and launched another investment firm. Anthony DiNovi and Scott Sperling have been with THL for over twenty years each and current serve as co-presidents.
From 1974 to 2019, the firm has raised more than $25 billion in equity capital and have financed approximately 140 portfolio companies representing an aggregate value of approximately $150 million. They invest primarily within the North American market across four sectors, including: business & financial services; consumer & retail; healthcare; and media, information services & technology.
Their most recent investment is with a company called Fortna – a global provider of distribution services and solutions. As a partner, THL will contribute funds towards Fortna’s future growth plans for continued geographic expansion and a potential M&A of their own. “We are excited to partner with THL, whose operating resources, extensive automation expertise and relationships will accelerate our next chapter of growth. This investment will create new opportunities for our associates and clients alike as Fortna provides solutions that deliver exceptional flexibility, agility and responsiveness to enable high-volume distribution centers,” said John A White, President and CEO of Fortna.
“We are thrilled about the opportunity to work with the talented Fortna team,” said Jim Carlisle, Managing Director at THL. “Fortna has earned an impressive reputation as a leading provider of automation solutions to the warehouse and distribution end market, which is driven by its continued focus on technology innovation, leading engineering talent, and reliable, on-time delivery of advanced automation equipment and software to its clients. We are excited to invest in this outstanding organization and look forward to supporting Fortna’s continued growth.”