Remembering Ted Forstmann (1940-2011)

Ted Forstmann

Even though friends knew Ted Forstmann had been diagnosed with the same illness that felled his younger brother, Nick, several years ago, his death Sunday, at age 71, was still a shock. Ted was an inspiring, larger-than-life figure who exuberantly personified the spirit of American capitalism.

I got to know Ted in the early 1990s when he played a crucial role in the launch of Empower America, a reform organization founded by Jack Kemp, Bill Bennett and Jeane Kirkpatrick. He was already a legend in the world of finance, having been a pioneer in the leveraged-buyout business. He recognized that a number of large U.S. companies were ill-run and that outside investors could bring in razor-sharp management, which could quickly enhance the current and long-term values of sleepily managed companies.

Empower America became an activist think tank that aggressively promulgated pro-growth ideas exemplified by Ronald Reagan. It provided critical grist for the mill that enabled Republicans to win both houses of Congress in the 1994 midterm elections, the first time the GOP had achieved such a feat in more than 40 years. But if it hadn�t been for Ted�s down-to-earth skills and ability to raise capital, Empower America would never have gotten off the ground.

A couple of things, among many, made Ted truly unique. He never succumbed to the entrepreneurial version of auction fever; that is, Ted had a sense of limits. When the LBO business began to overuse junk bonds, he uninhibitedly and loudly warned of dire consequences. He was right, of course: The LBO bubble popped with the 1990�91 recession.

Another rare thing about Ted was his deep appreciation and knowledge of the system that made his rise possible. It�s truly astonishing how many people do well in America yet are largely clueless about what makes American capitalism tick. They therefore end up advocating tax and regulatory policies that damage the very environment in which they were able to succeed in the first place. Ted was the happy exception. He studied the workings of our free-market economy and worked hard to promote policies that would nurture and strengthen the system, which, of course, is why he became involved with such organizations as Empower America.

Make no mistake: Ted Forstmann was no dabbler when it came to pushing needed reform, a prime example being education. Because he knew, intimately, that it takes outsiders to change a hidebound company or industry, Ted had no illusions about our dysfunctional education system being effectively reformed from within. But Ted did more than simply champion the idea of school choice. With the late John T. Walton he launched the Children�s Scholarship Fund, an organization that helps struggling parents send their kids to the schools of their choice. The fund has helped more than 123,000 kids escape the opportunity-killing clutches of dead-end, government-run schools.

Ted also involved himself in numerous other good works. As Ted�s life exemplified, the way to succeed in both business and philanthropy is by meeting the needs and wants of others.

A great man is gone.