Our Approach to Ownership

KKR acquisitions can take many forms. We have taken publicly listed companies private, acquired divisional assets through corporate divestiture transactions, partnered with family-owned businesses and strategic buyers, and purchased and grown companies through industry-consolidation strategies.

Our deals, though far from formulaic, share some basic features: KKR provides equity dollars and borrows money for the friendly acquisition of a business with predictable cash flows and strong management. The capital structure of the acquired business depends on the strategy for value creation, which is jointly developed by management and KKR. We work with our portfolio companies to design and execute plans for improving operations in such areas as manufacturing, sales, and marketing. Over time, generally several years, we exit our investments through IPOs, secondary offerings, and sales to strategic buyers. When investments are sold, profits are distributed to our investors, which include corporate and public pension plans, financial institutions, insurance companies, and university endowments.

An advantage of KKR ownership is that the boards and managers of our portfolio companies need not concern themselves with the short-term perspectives of the financial markets. We are patient investors. We do not focus on quarter-to-quarter results. We focus on building businesses over the long term. Typically KKR holds investments for several years, and in some cases we have held them for more than a decade.

Over the long term, effective ownership and management of a company leads to benefits for all of its stakeholders – employees, customers, suppliers, shareholders, and the community. The success of world-class companies depends on these same constituencies. KKR encourages its portfolio companies to invest in each stakeholder group. Employees, for example, should be trained in ways that prepare them for better, more demanding jobs. And we encourage our portfolio companies to contribute to the communities where they operate.