It is with some justification that Theodore “Teddy” Forstmann, the founder of Forstmann Little & Company, is described in aviation circles as “the man who saved Gulfstream.”
Although Forstmann was described on numerous occasions as “the master of the leveraged buyout,” there were nevertheless raised eyebrows in 1990 when he and Allen Paulson cut a deal to buy Gulfstream from Chrysler, where it had been long neglected with little or no support or guidance. Paulson and Forstmann paid $850 million for the Savannah, Ga.-based business jet manufacturer, with Paulson holding 32 percent and Forstmann 68 percent.
Jeffrey Rodengen, author of The Legend of Gulfstream, quoted Forstmann as saying of Gulfstream, “Here was the perfect company. It dominated its business, had a great product and was being let go by a giant company that simply didn’t have the time or resources to devote to it because its main business was cars–not jets.”
Unfortunately, the deal was consummated as the U.S. economy slipped into a recession. And more than once, in those first years, Forstmann was advised to cut his losses and dump Gulfstream, which at the time was heavily leveraged and facing growing competition from Bombardier Aerospace.
But faced with the options “win, lose or draw,” Forstmann saw only one, and that was to win. He knew that Gulfstream had a good product. What it lacked was good leadership, and Forstmann, with his genius for hiring the best people at the right time, set about correcting that.
In 1993, Fred Breidenbach joined the company as COO, and Chris Davis, a 17-year veteran of General Electric, took over as CFO. That same year, Forstmann himself took on the job of chairman and de facto CEO. In 1994 Bill Boisture was hired as a senior v-p, Pres Henne came in to head GV development and Joe Lombardo was hired to run co-production programs of the GIV-SP and GV. Then in 1995, Gulfstream dipped into competitor Bombardier’s top leadership to hire Bryan Moss as vice chairman of Gulfstream Aerospace and CEO of Gulfstream Aircraft.
The board of directors consisted of an unprecedented brain trust and included Henry Kissinger, former Secretary of State; Donald Rumsfeld, former Secretary of Defense; George P. Schultz, former Secretary of Labor, Treasury and State; Michael Ovitz , film industry agent and former president of Walt Disney Company; and General Colin Powell, former Chairman of the Joint Chiefs of Staff.
Gulfstream Goes Public
By the mid-1990s, with the GIV-SP and new GV in production, Gulfstream’s revenues were soaring, and in 1996 the backlog value was $3.3 billion. A year later, Gulfstream was planning 51 deliveries, an 89-percent jump from 1996. The company had also grabbed 70 percent of the service and parts business for its aircraft and revenues were $1.9 billion.
By the end of the decade, Gulfstream was doing almost all its own cabin completion work and was focused on seeing that every Gulfstream returned to the company for service, cabin refurbishment or upgrades. Gulfstream was no longer selling an airplane. It was selling an entire package that included product service at any Gulfstream center.
In 1996, Forstmann took Gulfstream public, selling 28 million shares in a successful initial public offering.
Forstmann met with the board of directors in 1999 and broached the subject of moving Gulfstream forward. But according to Rodengen, it was not an easy decision. “I just hated the idea of selling Gulfstream,” said Forstmann. “I would like to have Gulfstream until I ended…I love the people. Without them, there’s no way we could have been as successful as we were.”
With that, Gulfstream passed to General Dynamics for $5.3 billion. Not a bad return for an original investment of $850 million, in a little less than 10 years.
But it wasn’t all about money for Forstmann. It was about winning, and he made Gulfstream, and all those with him, winners.
Perhaps it would indeed be an appropriate epitaph, on a marker at the main gates of the Savannah-based manufacturer, so all who pass through can remember–Ted Forstmann, The Man Who Saved Gulfstream.
Gulfstream Ownership and Major Events
1930–The Grumman Aircraft Engineering Company is launched in a rented garage, and focuses on military contracts.
1938–Grumman goes public and begins production of the F4F Wildcat for the U.S. Navy.
1959–The FAA certifies the Grumman Gulfstream I, a civil twin turboprop.
1966–Grumman begins move of its civil aircraft business from Bethpage, N.Y., to Savannah, Ga.
1972–Grumman and American Aviation programs merge to become Grumman American.
1978–Allen Paulson of American Jet Industries purchases Grumman American, changes the name of the company to Gulfstream American and becomes president and CEO.
1982–The name of the company is changed to Gulfstream Aerospace Corp.
1985–Chrysler Corp. buys Gulfstream Aerospace as part of a plan to diversify and move into high-tech industries.
1990–Ted Forstmann, as head of Forstmann Little & Company, along with Allen Paulson, purchases Gulfstream Aerospace from Chrysler for $850 million.
1999–Defense giant General Dynamics purchases Gulfstream Aerospace for $5.3 billion.
2011–General Dynamics Aviation Services is rebranded as Gulfstream.
2012–Gulfstream Aerospace employs more than 11,500 people at 11 major locations in the U.S., England and Mexico. The aircraft line now includes the G650, G550, G500, G450, G350, G280 and G150.