BUSINESS • Thomas O. Hicks

He’s an invesment whiz who has made a fortune gobbling up other comapanies.

IT’S PREGAME BATTING PRACTICE for the Texas Rangers, and fans are leaning over the railing, trying to get Juan Gonzalez’s autograph, when a tall man in a business suit walks onto the field. “Mr. Hicks! Mr. Hicks!” several of them call to the new owner of the team, who smiles and walks over. It’s not every day an executive signs autographs at the ballpark. “I don’t know why fans want my autograph,” he tells me later with an amiable shrug. “I don’t tell the team what to do. I’m just there to watch the players too.”

In this business-savvy age, Thomas O. Hicks has become a genuine media star who is watched almost as much as his team. Such publications as the New York Times and Forbes magazine have printed awestruck stories about the number of companies being bought almost weekly by Hick’s leveraged buyout firm, Hicks, Muse, Tate, and Furst. U.S. News and World Report went so far as to predict that the silver-haired 52-year-old Hicks would dominate the country’s buyout business “for years to come,” besting such legendary New York financiers as Henry Kravis, whose exploits in buying out RJR Nabisco were chronicled in the 1990 book Barbarians at the Gate.

Hicks is no Jerry Jones. He is hardly colorful during interviews, he reveals little about his personal life, and he says nothing particularly memorable when the subject gets around to the investment strategies that have made him and his investors hundreds of millions of dollars. When his partners are asked to describe him, they talk in general terms about his “optimism” and his “determination” and his “guiding vision.” But David Deniger, a Hicks, Muse partner and a friend since college, says the real reason Hicks remains successful is “he does not assert his power around the firm. He sets the tone of the company, then he believes deeply in his partners, who work extremely hard finding and executing deals. Tom has built a firm that has turned out to be bigger than he is, and he takes pride in that.”

Indeed, it is hard to imagine that Hicks could possibly keep up with everything going on in his firm’s offices, which are on the sixteenth floor of the Crescent Court building near downtown Dallas. At the end of 1997, after only nine years in existence, the firm had acquired or bought controlling interest in more than 180 companies that had a combined value in excess of $25 billion. The action so far in 1998 has been eye-popping. In January, Hicks, Muse bought the Texas Rangers for $250 million. In the spring the company agreed to pay $860 million for two divisions of the Simon and Schuster publishing company; then it put $1.1 billion in equity into a $2.3 billion deal for Regal Cinemas and Act III Theatres, two national movie theater chains; and then it spent $750 million for Home Interiors and Gifts, the Dallas company that sells home-decorating accessories. In June Chancellor Media, one of Hicks, Muse’s media companies, announced it was buying a national billboard advertising company, Martin Media, for $610 million to add to the Hicks, Muse media empire of 430 radio stations and 24 television stations. The firm spent $500 million and raised an additional $300 million to acquire 30 percent of an Argentine media company that owns large stakes in Argentina’s biggest telephone and cable television firms.

Oh, and somewhere in all the transactions, Hicks and his partners, who also own the Dallas Stars hockey team (Hicks himself owns 81 percent of the team), found time to sign Brett Hull, the most sought-after free agent in the National Hockey League, to a three-year, $17 million contract.

Composed of nine principal partners and 91 associates and employees, Hicks, Muse has become one of the most influential financial centers in the country. Major public pension funds, blue-chip corporations such as American Airlines and Chrysler, and wealthy individuals are lining up to get Hicks, Muse to invest their money. As a leveraged buyout firm, Hicks, Muse uses this money to invest in other companies or buy them outright. (Unlike firms that engage in hostile buyouts, Hicks, Muse only buys companies willing to sell themselves.) The firm raised $2.5 billion for a 1996 investment fund, and it is planning by year’s end to raise more than $5 billion for another. Hicks, Muse also has two real estate funds (through a separate corporation the firm owns the Algonquin Hotel in New York City and a group of Arnold Palmer—designed golf courses) and a $950 million Latin American fund. It recently began a series of funds that will total $500 million and invest nationwide in minority-owned companies in mostly urban areas over the next five to ten years. “It’s my way of giving something back,” Hicks says, emphasizing that he plans for much of that minority investment to be in Dallas. Then he shrugs again. “Of course, I wouldn’t do it if I didn’t think it was also a good investment opportunity.”

Hicks and company are a shrewd bunch. According to one estimate, their efforts have rewarded clients with annual returns of 35 to 40 percent. Every Monday morning the partners meet to discuss their investments—actual and potential. Hicks is the chairman and chief executive officer, but, says 39-year-old Jack Furst, one of Hicks’s younger partners, “the truth is that an outsider could watch the meeting and not know who is the boss. It’s not a bureaucratic structure. Every partner here is given the freedom to identify a deal and pursue it.”

But there’s a catch. If one partner finds a potential acquisition, the other eight must unanimously agree to pursue it. “Each partner has the capability of checkmating the other,” says Hicks, “and that someone can checkmate me as well.” Such a strategy means a partner had better know his potential acquisitions inside and out. “You can’t walk into that meeting and pitch an idea by saying, ‘Hey, I’ve found an opportunity. What do the rest of you think about it?’”

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