THE ART OF THE DEAL - Reginald F. Lewis

                   In The 1980's, Beatrice was a phenomenon. In 1987, through deal-making savvy and iron-willed tenacity, 44-year-old Lewis bagged the proverbial elephant: Beatrice International Foods Cos., a manufacturer of processed meats, dairy products and beverages. The Harvard-trained lawyer had first demonstrated his prowess years earlier by launching an investment firm, the TLC Group, and completing the $22.5 million acquisition of New York-based McCall Pattern Co., a home-sewing products and publishing operation. In trademark fashion, Lewis would flip the then-113-year-old company for $90 million, netting $50 million in profits in the process. (By 1987, TLC Group was No. 6 on the BE INDUSTRIAL/SERVICE 100 list with revenues of $63 million.)

In purchasing Beatrice, Lewis teamed up with Michael Milken, the legendary junk bond king and senior executive of Drexel Burnham Lambert, the maverick investment bank of the '80s. Lewis used high-yield debt, or "junk bonds," to acquire the company in a $985 million leveraged buyout, beating out such powerhouses as Citicorp, Pillsbury and Shearson Lehman Brothers. At the time, it was the largest offshore transaction ever and, with $1.8 billion in gross sales, TLC Beatrice became the first black-owned company to crack the billion-dollar ceiling. (As TLC Beatrice, it held the top position on the BE 100s for 11 years, growing to $2.2 billion in sales on the 1998 BE INDUSTRIAL/SERVICE 100 list).

After completing the transaction, Lewis didn't have time to stand on ceremony. In fact, he was uncomfortable being labeled "the Jackie Robinson of deal making." He was a man who wanted to be measured by performance, not race. "To carry around the notion that if I fail, it's going to mean that no other black person will ever have a similar opportunity, or that if I succeed, it's going to open a floodgate of opportunity for other black Americans, misses the point," he said at the time. "If our work is perceived as an indication that we can function in a global, competitive situation, that's nice. But I've always believed that anyway."

Loida Lewis frames the event this way: "Mr. Lewis was able to prove that you don't have to start from scratch and reinvent the wheel. He was able to perform a classic LBO like the white guys."

Whether he wanted to assume the role or not, Lewis became emblematic of the rise of the black financial entrepreneur. TLC represented an institutional model of black business instead of the more traditional, patriarch-controlled family business. After the Beatrice deal, it no longer was viewed as uncommon for an African American entrepreneur to catapult to the upper echelons of the BE 100s by merging with another company or acquiring a division of a Fortune 500 corporation. In fact, one of his former managers, Dumas M. Simeus, would appear on the BE INDUSTRIAL/SERVICE 100 list by 1997. (Mansfield, Texas-based Simeus Foods International Inc. is ranked No. 11 on the 1999 BE INDUSTRIAL/ SERVICE 100 list with $150 million in gross sales.)

Reginald Lewis: The Deal Heard 'Round the World

His $985 million buyout of TLC Beatrice set the bar for the next generation
By Derek T. Dingle

In 1987, a 44-year-old Wall Street attorney -- armed with deal-making prowess and iron-willed determination -- acquired a division of one of the nation's 500 largest corporations for almost $1 billion. The transaction was a crowning moment in business: it created the first black-owned enterprise to surpass the billion-dollar revenue mark.

The financial wizard who orchestrated that landmark deal was Reginald F. Lewis. His new entity, TLC Beatrice Foods Co., would go on to become a global conglomerate that controlled food and beverage manufacturers and supermarkets in 31 countries. In 1988, after reporting gross sales of $1.8 billion on the BE INDUSTRIAL/SERVICE 100, TLC Beatrice became the nation's largest black-owned business. It held the top spot for 11 years, growing to $2.2 billion in sales on our 1998 ranking.

That historic deal 18 years ago heralded a new era for black entrepreneurship and raised the bar for a generation of minority deal makers. Among the entrepreneurs Lewis directly influenced are Cleveland Christophe, managing partner of TSG Capital Group -- which was No. 2 on the BE PRIVATE EQUITY FIRMS list last year -- and Dumas Simeus, a former TLC manager who grew Simeus Foods International, a Texas-based frozen-food products manufacturer, into one of the nation's top black industrial/service companies.

Lewis, a Harvard-trained lawyer, gained his acumen for deal making in t`70s by helping minority firms get financing from MESBICs: SBA-sponsored venture capital firms run by corporations and foundations. In 1974, Lewis helped black investment bank Daniels & Bell complete a leveraged buyout of Cocoline Chocolate Co., the first such transaction handled by African American entrepreneurs

(see "Travers Bell: Breaking Barriers on Wall Street ). 

Eventually Lewis launched his own investment firm, TLC Group, which made history when it completed the $22.5 million acquisition of New York-based McCall Pattern Co., a sewing products and publishing operation. A shrewd financier, he sold the then-113-year-old institution for $90 million, netting a $50 million profit.

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