Thomas H. Lee's Sperling Sees 'Frothy' Deal Prices

Private equity as an investment asset class has grown dramatically over the past 40 years. The deal that arguably put PE on the map was the purchase of iced tea maker Snapple by Thomas H. Lee Partners in 1992. THL took Snapple public just eight months after buying it, and sold it to Quaker Oats for $1.7 billion two years after that. Scott Sperling, the co-Chief Executive Officer of THL, discusses that and other important deals as the latest guest on the Masters in Business podcast.

Snapple became a model for PE deals because THL identified a company whose growth could be accelerated, redeploying assets in a way that created positive returns and then allowing the market to revalue the company. Sperling explains how PE has changed over time, starting from when he oversaw alternative investing for the Harvard University endowment. When he began there in 1984, there were almost no alternative investments in the endowment, but by the time he left 11 years later, they made up about 20% of holdings. Sperling says pricing in private markets currently ranges from “fair to frothy.”

Sperling has been Co-CEO of THL for more than 20 years and is a member of the firm’s management and investment committees. THL raised more than $22 billion from 1974 to 2006, completing more than 100 investments totaling in excess of $125 billion. Its flagship fund manages more than $5 billion.

Some of his favorite books is here; A transcript of our conversation is available here.

You can stream and download our full conversation, including the podcast extras on iTunesSpotifyStitcherGoogleBloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.

Be sure to check out our Masters in Business next week with Carson Block of Muddy Waters. The firm is known for its scathing in-depth research reports and short interest in various companies, several of which have collapsed. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”

©2021 Bloomberg L.P.

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