Theodore 'Ted' Forstmann, a larger than life financier and philanthropist died on Sunday at the age of 71.  The cause was brain cancer.  The following account was presented by Dealbook's Andrew Ross Sorkin.

Mr. Forstmann was among the very first executives to use debt to acquire companies, fix them and then sell them for millions –  and sometimes billions –  of dollars in profits.

Beginning in the late 1970s, he pooled money from wealthy investors and large pension funds to back his acquisitions, while taking 20% of the profits, creating a business model that today is known as the private equity industry.

Over the next three decades, Mr. Forstmann bought, sold and turned around dozens of companies including Gulfstream Aerospace, Dr Pepper and General Instrument.

He also coined, if inadvertently, a phrase that set the public image of the leveraged buyout industry. While golfing in the late 1980s with Richard L. Gelb, then the chairman of drug maker Bristol Myers, the discussion turned to a surge in takeovers by buyout firms. “What does it all mean?” Mr. Gelb asked Mr. Forstmann.

“It means the barbarians are at the gate, “ Mr. Forstmann replied.  “And they’ll be coming for you next.”

The phrase “barbarians at the gate,” was used by Bryan Burrough and John Helyar in their 1990 best-selling book about the $25 billion buyout of RJR Nabisco, which Mr. Forstmann had bid on and lost to a private equity rival, Kohlberg Kravis Roberts. Mr. Forstmann happily recounted his conversation on the golf course dozens of times.

Yet as buyouts grew and more and more debt was used to finance deals, Mr. Forstmann grew more cautious about the business, calling the heavy use of debt “wampum” and “funny money.” In an op-ed article in The Wall Street Journal in 1988, at the height of the buyout craze, he wrote, “Watching these deals get done is like watching a herd of drunk drivers take to the highway on New Year’s Eve.”

Mr. Forstmann, who gave hundreds of millions of dollars away to charity, was also among the first philanthropists to push for voucher programs for education in the 1990s, leading to the movement by financiers to promote charter schools. In 1999, he founded the Children’s Scholarship Fund, with John T. Walton, the son of the Wal-Mart founder Sam Walton, to offer scholarships to underprivileged children to attend private schools using vouchers. He donated $50 million.

The scholarship fund has since given away $443 million to 116,000 children.

Most of Mr. Forstmann’s philanthropy centered on children. Starting in the 1980s, he was a Big Brother. In 1992, he founded the Silver Lining Ranch, a camp for terminally ill children in Aspen, Colo. that was first run by Andrea Jaeger, the former professional tennis player. And for 25 years, he held a prominent charity tennis tournament, dubbed “Huggy Bear,” at his summer home in Southampton, N.Y., raising over $20 million dollars for children’s charities, by bringing tennis pros like Martina Navratilova and Boris Becker to play against amateur donors.

His charitable instincts went beyond the usual Manhattan charity circuit. In 1994, he flew on his GulfStream IV jet to Bosnia to deliver millions of dollars of medical supplies and emergency service personnel.

To Continue Reading, go to:   [Dealbook, 11/20/11]