Ronald Perelman, American businessman and philanthropist, founded MacAndrews & Forbes

Ronald Perelman: A Prominent American Banker, Businessman, and Investor

Ronald Owen Perelman, born on January 1, 1943, is a distinguished American banker, businessman, and investor renowned for his strategic acquisitions and vast conglomerate. Over several decades, Perelman has cultivated a substantial empire primarily through his private holding company, MacAndrews & Forbes Incorporated, demonstrating a keen eye for diverse business opportunities and a characteristic approach involving leveraged buyouts.

MacAndrews & Forbes: A Diverse and Opportunistic Investment Portfolio

MacAndrews & Forbes Incorporated serves as Ronald Perelman's private investment vehicle, through which he has executed numerous acquisitions across a remarkably wide array of industries. His strategy often involves identifying companies with strong brand recognition or hidden value, acquiring them, and then working to improve their performance or divest them for profit. This approach has led MacAndrews & Forbes to hold significant interests in sectors ranging from consumer goods to specialized technology. The company's diverse portfolio has included investments in:

• Groceries: Including food products and distribution.
• Cigars: Such as leading brands in the tobacco sector.
• Licorice: Highlighting his varied interests in confectionery and food.
• Makeup: Most notably through his long-standing ownership of Revlon.
• Cars: With a significant past stake in AM General, known for military and civilian vehicles.
• Photography and Media: Including film post-production and digital media services.
• Television: Investments in broadcasting and content creation.
• Camping Supplies: Expanding into outdoor recreational markets.
• Security: Interests in companies providing security solutions.
• Gaming: Major involvement in the lottery and casino gaming industry.
• Jewelry: Ownership in high-end luxury retail.
• Banks and Financial Services: Including payment solutions and marketing services for financial institutions.
• Comic Book Publishing: A historic ownership of Marvel Entertainment in the 1990s, a notable example of his opportunistic investments that later proved highly lucrative for subsequent owners.

Key Holdings and Strategic Divestments

Over the years, Ronald Perelman has held significant stakes in a multitude of companies. His portfolio has been dynamic, characterized by both long-term commitments and strategic sales. Some of the notable entities in which he has held significant shares include:

• Deluxe Entertainment: A leading provider of post-production and distribution services for the film and television industry.
• Revlon: A global cosmetics, skincare, fragrance, and personal care company, acquired by Perelman in 1985 through a highly publicized leveraged buyout.
• SIGA Technologies: A biopharmaceutical company known for developing treatments for smallpox and other viral diseases.
• RetailMeNot: A popular digital coupon and deals marketplace.
• Merisant: A company specializing in sugar substitutes, including brands like Equal and Canderel.
• Scantron: A provider of data collection, assessment, and technology solutions, particularly known for its optical mark recognition (OMR) scanners.
• Scientific Games Corporation: A global leader in lottery games, casino games, and sports betting products and services.
• Valassis: A prominent marketing and advertising services company.
• vTv Therapeutics: A clinical-stage biopharmaceutical company focused on metabolic diseases and central nervous system disorders.
• Harland Clarke: A major provider of payment solutions, marketing services, and data analytics for financial institutions.

The Impact of Leveraged Buyouts and Economic Shifts

Perelman's investment strategy has heavily relied on leveraged buyouts (LBOs), a financial technique where a company is acquired using a significant amount of borrowed money. While LBOs can yield substantial returns, they also introduce high debt burdens. The economic downturn that began in early 2020, significantly impacted by the COVID-19 pandemic, exacerbated these debt challenges for many of his companies.

In response to these pressures, Ronald Perelman undertook significant divestments in 2020. He sold the majority of his shares in AM General, a company well-known for producing military Humvees and previously the civilian Hummer. This sale was a critical move to reduce debt burdens. Concurrently, he also divested significant works from his extensive art collection, further highlighting the need to generate liquidity and address financial obligations across his highly leveraged portfolio.

Around the same period, Revlon, a cornerstone of his empire since its acquisition in 1985, faced severe financial strain. In early 2020, Revlon undertook a complex debt deal to restructure its substantial obligations, reflecting the broader economic challenges and the specific pressures on the highly indebted company.

Evolution of Net Worth: A Steep Decline

Ronald Perelman's financial standing experienced a dramatic shift during this period. Previously, his net worth was estimated at a peak of $19.8 billion in 2018. However, by September 2020, his wealth had seen a precipitous decline, dropping to an estimated $4.3 billion. This significant reduction underscores the considerable impact of the economic downturn, the high debt levels accumulated from numerous leveraged buyouts, and the challenging performance of several key assets within his portfolio.

Frequently Asked Questions about Ronald Perelman

Who is Ronald Perelman?

Ronald Perelman is an American banker, businessman, and investor, widely recognized for building a vast business empire primarily through leveraged buyouts and his private holding company, MacAndrews & Forbes Incorporated. He has invested in an extremely diverse range of industries, from cosmetics to comic books.

What is MacAndrews & Forbes Incorporated?

MacAndrews & Forbes Incorporated is Ronald Perelman's private holding company. It serves as the primary vehicle for his investments and acquisitions, which span numerous sectors including consumer products, media, finance, and manufacturing.

What is a leveraged buyout (LBO)?

A leveraged buyout (LBO) is a financial transaction in which a company is acquired using a significant amount of borrowed money (leverage) to meet the cost of acquisition. This strategy allows investors like Perelman to make large acquisitions with a relatively smaller amount of their own capital, but it also means the acquired company carries a high debt burden, which can be challenging during economic downturns.

Why did Ronald Perelman's net worth decrease significantly?

Ronald Perelman's net worth saw a substantial decline primarily due to the severe economic impact of the early 2020 global recession (exacerbated by the COVID-19 pandemic), which particularly affected highly leveraged companies within his portfolio, such as Revlon. The high debt burdens from his numerous leveraged buyouts necessitated asset sales, like AM General and significant works of art, to manage liquidity and reduce financial pressure.