Abstract

Three Bear Stearns veterans, Kohlberg, Kravis and Roberts, started Kohlberg, Kravis, Roberts & Co (KKR) in 1976. By the 1990s, the businesses that KKR controlled would have placed it amongst the top ten US corporations, had it been an industrial company. The firm had mobilised more funds than the GNP of many small countries put together. But performance of leveraged buyout funds had declined in the 1990s. From early 2000, KKR found the deals drying up. In 2003, KKR also looked thin on management talent even as competition intensified. The once invincible company seemed to be at the crossroads. The case can be used as part of an investment banking course to explain how deals are structured. It can also be used as part of a strategic financial management course to illustrate important principles of capital restructuring.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

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Keywords

Leveraged buyout, Buyouts, Takeovers, Corporate finance, Henry Kravis, Deal making, RJR Nabisco, Kohlberg, Kravis, Roberts & Co, Investment banking, Management case study, MBA case study, Washington State Pension Funds