Authors: Ravi Madapati,
Faculty Member,
ICMR (IBS Center for Management Research).
The Road AheadIt had been the experience, ingenuity and resources of KKR that had set the firm apart. KKR was in the business of identifying compelling investment opportunities and acting as a catalyst to bring together the right people and the right financial and operational resources to create substantial value for its investors and management-partners.
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KKR had tried to make up for its smaller size with greater attention to detail. The 10 partners other than Kravis and Roberts were on average 45 years old. Scott Stuart, 43, and Ned Gilhuly, 42, served on the firm's investment committee5 with Michael Michelson, 51, Kravis and Roberts. KKR no longer controlled the LBO business or intimidated its rivals like it once used to. As the number of attractive deals decreased, buyout firms were sharing takeover targets.
LBO firms were raising funds much more quickly than they were able to invest them. Caught amidst the vagaries of the market and the shrinking pie of potential acquisitions, KKR seemed like it was past its prime. The dearth of deal-flow was looming like a large black cloud on this once invincible firm's horizon."
5] This committee made all the investment decisions.