Tito's Blog

Big Buyout Firms Reinventing Themselves

Big buyout firms need to reinvent themselves because their investors are not going to pour billions into their next funds after the bust of the LBO boom and related losses.

So Kravis of KKR says:

The days are long gone when you just buy a company and hope that financial engineering will work. Our job today is to create value. Private equity, to me, is acting and thinking like an industrialist.

Firms like KKR are thinking about tapping the public markets to raise permanent capital for their equity investments and move to a more “berkshire-like” investment model. Until now private equity firms would raise closed-end funds with a predetermined life time, usually 10-12 years, which entails launching a new fund raising process every 4-5 years (a few notable expections are evergreen funds, such as Golden Gate Capital’s).