KKR pioneered the private equity business: Here are its hits and misses – New York Post


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KKR announced the end of an era Monday with co-founders Henry Kravis and George Roberts saying they were stepping back immediately to allow co-presidents Scott Nuttall and Joseph Bae to become co-CEOs.
The KKR co-founders, along with original partner Jerome Kohlberg — who left the firm in 1987 and died in 2015 — are credited with inventing leveraged buyouts in the 1960s and 1970s.
KKR bought businesses by making small down payments and having the companies they acquired borrow most of the rest of the purchase price — making the companies responsible for repayment. The acquired companies would claim the money they borrowed as depreciation — operating expenses — and their tax rates would fall dramatically.
First, they bought companies through LBOs for Bear Stearns and then launched their own firm.
“This was something the KKR guys discovered. It was really driven by tax benefits,” John Canning, who formed private equity firm Madison Dearborn, said in this reporter’s book, “The Buyout of America.” Canning funded many of the first Kohlberg deals as a First Chicago lender.
By the early 1990s, LBO firms  had rebranded themselves as private equity firms. This came after Michael Douglas portrayed a corporate-raiding character modeled on Kravis in the movie Wall Street.
KKR also expanded into new areas, including technology and infrastructure investing — and it also grew globally, especially in Asia.
KKR has gone from its creative beginnings to having completed private equity transactions worth $655 billion of enterprise value, according to the firm. Presently, it owns companies ranging from 1-800-Contacts, Gibson Guitars and US Foods to hospital biller Envision Healthcare.
A KKR spokesperson said of the Kravis and Roberts: “They started the business to make companies better than when they found them, while at the same time giving KKR’s investors a good return.”
The firm is one of the country’s biggest private employers through the businesses it owns likely overseeing more than one million workers.
So, what have been some of its biggest hits and misses?
Hits:
Misses:
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