Dealmaker § The Mouse That Roars

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We act as if we own 100% of the company even if we don't.

Keywords:
Private Equity

Mentioned:
Stan Gold
Gene Krieger
Clifford Miller
Shamrock
Roy Disney
Disney

Article
Inside the Deal Shop : The Mouse That Roars

Roy Disney’s $2 billion private-equity shop, Shamrock, obviously loves media deals. But armed with a vested team and an altruistic streak, it’s rapidly breaking into new areas

By: Ben Mattlin
Premiere Issue , Page 96

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In 1977, Roy E. Disney, Walt’s nephew and the last family member actively involved in the entertainment giant that bears his name, resigned from the management team, citing a disagreement over the company’s creative direction.

From this squabble (indirectly) was born a firm that, like the animation studio launched by his famous uncle and his father, Roy O. Disney, was well ahead of its time: Shamrock Holdings, a private-equity shop launched the next year as a vehicle to diversify and increase the Disney family’s wealth.

No personal fief, Shamrock has evolved into a multifaceted, activist manager, with $2 billion under management, at least 10 percent of which remains Disney family money.

That’s still fairly small, but Shamrock’s reach and reputation — an internal rate of return of 25 percent over the past quarter-century, including 30 percent over the past five years — are growing: “What attracted GE to Shamrock was its diverse, imaginative leadership style,” says John H. Myers, president and CEO of GE Asset Management, who has been placing money with Shamrock for almost 20 years. “We believe in building relationships, and that’s rewarding and easy with them.”

Headquartered in Burbank, California — down the street from a big Scooby-Doo billboard at a Warner Bros. studio that seems at once ironic and appropriate, given the firm’s provenance — Shamrock commissioned, owns and fully occupies a modern three-story office building, complete with koi pond in the atrium, that a sign outside dubs shamrock center.

Despite an informal vibe, the 66-employee firm’s strategy belies the notion that it’s just some laid-back Hollywood deal shop: Shamrock’s top brass invests in companies with the stated goal of getting their hands dirty, if necessary, to turn them around.

“Being active investor/owners is one of our cultural hallmarks,” says Stanley Gold, president and CEO of both Shamrock Holdings, which handles the Disney family’s financial affairs, and Shamrock Capital Advisors, its private-equity arm. “We act as if we own 100 percent of the company even if we don’t.”

Shamrock has historically employed two primary strategies — and staffs — for spearheading deals. The first acquires controlling positions in domestic media, entertainment and communications companies, generally putting between $15 million and $50 million to work in companies valued between $50 million and $250 million; the second buys only Israeli companies, with no industry restrictions.

The justification for the first is obvious. Though Roy Disney himself — a tall, friendly man invariably clad in sporty yachting attire — is scarcely involved in day-to-day operations, as chairman he’s still a tangible presence in the firm.

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