The founder of private equity firm Forstmann Little died today of complications from brain cancer. He was 71. Forstmann was best known as a critic of junk bonds who lost the 1989 bidding war with Kohlberg Kravis Roberts for Nabisco chronicled in the book Barbarians At The Gate: The Fall Of RJR Nabisco. But Forstmann also was active in media. He bought Ziff-Davis Publishing in 1994 and turned it around. He also bought IMG, a management firm that handles athletes including Tiger Woods and Roger Federer. Other media investments included Citadel Broadcasting and Topps. In 1995 the National Academy of Popular Music gave him its Patron of the Arts Award. Media execs flocked to Forstmann’s annual conferences in Aspen, which attracted world leaders including Bill Clinton, Nelson Mandela, and late Pakistani Prime Minister Benazir Bhutto. The billionaire also was well known for his personal life which included relationships with Princess Diana and Top Chef star Padma Lakshmi. The end of his life was marred by a power struggle with longtime friend Michael Ovitz over IMG.
Michael Ovitz And IMG World And Teddy Forstmann’s Brain Cancer: The Real Story, And Also What Ovitz Told Me About It
EXCLUSIVE: First, let me knock down this untrue rumor: I know for certain there is no IMG World board meeting on a conference call or otherwise today to discuss ousting board member Michael Ovitz in response to allegations he’s maneuvering inside the board and with Forstmann, Little & Co investors to run and/or own the global management and production giant. Also, let me say definitively that Mike Dolan is and will remain for some time IMG’s President/COO because he was handpicked by chairman/owner Teddy Forstmann to run the company. The 71-year-old Forstmann is battling brain cancer in a very public and courageous struggle. Forstmann specifically told his board members that, no matter what happened to him, Dolan was to be given a minimum of 2 to 3 years to continue running IMG’s global sports, fashion, entertainment, and media business if not longer. IMG’s board is purely an advisory board since this is a private company (and not like a board of directors of a public corporation) and therefore does not have the power to remove any board member much less Ovitz.
What the real story is, according to my months of reporting, is that IMG management has lawyers working on how to remove Ovitz from the board and prevent him from interfering with Dolan’s running of the company or with Forstmann, Little & Co investors. “This prick was fucking around with management. Is he being put in his place? Yes,” an insider tells me. The allegations against Ovitz include that he is “harassing” management by demanding IMG financial records; pressuring Dolan and senior IMG executives to report to him by trying to set up a so-called executive committee within the board to oversee IMG activities because of Forstmann’s illness and treatment; and approaching Forstmann, Little & Co partners and investors telling them he was interested in buying IMG with the backing of Greg O’Hara, the managing director of One Equity Partners LLC.
(One Equity Partners is a private equity firm that often functions as the leveraged buyout arm of JP Morgan Chase & Co which is a primary investor. O’Hara is becoming quite a controversial character because of the Hollywood company he keeps: besides Ovitz, he is also trying to raise money for embattled Ryan Kavanaugh to buy out his Relativity Media’s investor Elliott Associates. But so far that has been all talk and no action. Same now with Ovitz, who according to my reporting was not anywhere close to securing the money to buy out IMG.)
Recently, according to my sources, Dolan decided, “Ovitz goes or I go.”
“So really the fight is between Mike Ovitz and Mike Dolan, the handpicked guy by Teddy to run the company,” an insider tells me. “Ovitz is interfering with running the company while Teddy is sick. It’s like what Alexander Haig did when Reagan was shot: ‘I’m in charge here.’ That’s the bullshit he’s trying to pull. So now lawyers are advising Mike Dolan.”
Ovitz has strenuously denied to me that he wants to run and/or buy IMG or has attempted to do so. (See Ovitz’s comments below.) “Of course he’s denying it. He’s a scumbag,” a board member tells me. “But the problem for him is that he cast a net so wide looking for backing and money. He’s out of the closet. He’s not even subtle about it. He wants to own the company, and he doesn’t believe in current management. But this is a very healthy company. Throw the motherfucker Ovitz out. Teddy doesn’t need to deal with this shit.”
The allegations against Ovitz might be harder to believe if he didn’t have a history of trying to destabilize companies to further his own ambitions. And Ovitz also has a history of using people’s illnesses to his advantage in business situations. (At the same time, to be fair, Ovitz also has a history of helping people to recover from illness. He is a complex guy…)
Back in early May, I was first tipped by an insider that “Ovitz is trying to become CEO of IMG while Teddy Forstmann has brain cancer”. As a long-time Ovitz watcher, I was naturally intrigued. Especially because Ovitz (despite his protestations to the contrary) has been trying to find his way back into the business spotlight ever