J.H. Whitney & Company - History - The 1980s and The Move To Leveraged Buyouts

The 1980s and The Move To Leveraged Buyouts

In response to the changing conditions, in the venture capital industry in the 1980s Whitney (and other early venture capital firms including Warburg Pincus) began to transition away from venture capital toward leveraged buyouts and growth capital investments, which were in vogue in that decade.

Whitney's most public foray into the leveraged buyout space came in 1989, when it completed the acquisition of Prime Computer. In 1988, "corporate raider" Bennett S. LeBow, who controlled a smaller computer maker, MAI Basic Four, began an attempted $970 million hostile takeover of Prime Computer. Management resisted LeBow's advances and eventually agreed to a $1.3 billion leveraged buyout with Whitney, acting as a white knight. For Whitney, owning Prime proved to be nearly a total loss with the bulk of the proceeds from the company's liquidation paid to the company's creditors.

Whitney would complete other buyouts in the 1980s including the acquisition of retailer Filene's Basement.