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Kohlberg Kravis Roberts & Co (commonly referred to as KKR) is a New York City based private equity firm that focuses primarily on late stage leveraged buyouts. It was founded in 1976 by Jerome Kohlberg, Jr., and cousins Henry Kravis and George R. Roberts, all of whom had previously worked together at Bear Stearns.
KKR helped develop and popularize the acquisition concept known as the leveraged buyout (LBO) by creating a series of limited partnerships to acquire various corporations, which they deemed to be underperforming. In most cases, KKR (often with management) financed up to ten percent of the acquisition price with its own capital and borrowed the reminder through bank loans and by issuing high-yield bonds. KKR would often ensure that the target company's management retained an equity interest to better align the interests of the managers and KKR.
The bank loans and bonds used to finance the acquisition were collateralized by the tangible and intangible assets of the target company. Because the bondholders only received their interest and principal payments after the banks were repaid, these bonds were deemed riskier than investment grade bonds in the event of default or bankruptcy, and popularly became known as "junk bonds." Investment banks such as Drexel Burnham Lambert, led by Michael Milken, helped raise money for leveraged buyouts. Once the targeted company was acquired, KKR would help restructure the Company, potentially selling off certain assets and implementing a series of cost-cutting measures. The new, "leaner and more efficient" company could then be resold, often at significant return on investment.
Deals
In 1987, at age 61, Jerome Kohlberg resigned from the firm (later founded his own private equity firm, Kohlberg & Co.) and Henry Kravis succeeded him as senior partner. Under Kravis, the firm was responsible for the 1988 leveraged buyout of RJR Nabisco. At a cost of nearly $25 billion, it was the then highest price ever paid for a commercial enterprise and is still the largest LBO in history. The publicity surrounding the buyout led to a book, Barbarians at the Gate: The Fall of RJR Nabisco and subsequent film. In early 1995, KKR divested its remaining holdings in RJR Nabisco.
The list of companies KKR has bought and sold over the years includes many of the great American brand names such as Texaco, Gillette, Playtex, Beatrice, Safeway, Borden, and Samsonite. Recently, KKR has been expanding into Europe with acquisitions such as MTU Aero Engines.
Team As of 1996, general partners (as opposed to associates) included Henry Kravis, George R. Roberts, Paul E. Raether, Robert I. MacDonnell, Michael W. Michelson, Saul A. Fox, James H. Greene, Jr., Michael T. Tokarz, Clifton S. Robbins, Scott M. Stuart, Perry Golkin and Edward A. Gilhuly. Gilhuly is now the Managing Partner of KKR's European operations, based in London.
See also
External link - http://www.kkr.com/
- Yahoo! - Kohlberg Kravis Roberts & Co. Company Profile (http://biz.yahoo.com/ic/40/40268.html)
Articles - FT.com / Industries / Basic industries - KKR set to buy Masonite for C$3.1bn (http://news.ft.com/cms/s/1bb89590-5468-11d9-a749-00000e2511c8.html)
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