Key Takeaways
- • KKR argues private equity exits remain achievable in turbulent markets when managers plan early, pursue multiple exit routes, take creative approaches, and drive value creation, with nearly 60% of its private equity exits completed as sales to strategic corporates or sponsors.
- • KKR targets a five-to-seven year hold period and typically begins monetizing once roughly 80% of its operational improvement goals are achieved.
- • The Bountiful Company was sold to Nestlé in early 2021 after Nestlé submitted an offer before the planned IPO roadshow, illustrating the value of keeping multiple exit options open.
- • Kokusai Electric's 2023 Tokyo Stock Exchange IPO, the largest in Japan since 2018, followed a failed strategic merger due to regulatory challenges and a delay caused by market volatility.
- • Minnesota Rubber and Plastics was sold to Trelleborg AB in August 2022, after KKR built a global innovation center and made two bolt-on acquisitions during ownership.
Summary
In a KKR publication titled "Please Locate the Nearest Exit," the firm addresses investor concerns that private equity companies have become increasingly difficult to sell or take public. KKR states that geopolitical tensions, regulatory changes, and market volatility have heightened concerns about exit prospects, but argues that aggregate industry views obscure wide performance dispersion across managers. The firm contends that delayed exits can produce muted returns, liquidity challenges for investors, and less dry powder for managers to deploy.
KKR outlines four principles: planning early for exits, embracing multiple ways to win, taking a creative approach, and driving value creation. According to the firm, nearly 60% of its private equity exits have been sales to either a strategic corporation or a sponsor. KKR says it avoids binary-outcome companies in favor of durable business models, applies a linear deployment approach to exits rather than relying on market timing, and generally looks to monetize once about 80% of its operational improvement goal is reached. Its target hold period is five to seven years.
The firm cites Bountiful, a North American vitamins and supplements provider it acquired in 2017. With KKR Capstone support, Bountiful strengthened its R&D, streamlined manufacturing, and professionalized its health supplements segment. By 2021 it had achieved double-digit sales growth, and KKR Capital Markets began preparing an IPO. Nestlé expressed interest, conducted full due diligence, and submitted an offer before the roadshow, leading KKR to sell Bountiful to Nestlé in early 2021.
KKR also describes Kokusai Electric, a Japan-based semiconductor equipment maker formerly a Hitachi subsidiary. A planned strategic merger failed because of regulatory challenges, and KKR later delayed an IPO following volatility linked to the Russia-Ukraine conflict. KKR says it pursued a "buy complexity, sell simplicity" thesis, boosting R&D, expanding margins, increasing global headcount by over 30%, and introducing an employee ownership program. The Tokyo Stock Exchange IPO in 2023 was, according to KKR, the largest in Japan since 2018 and the biggest private equity-backed IPO in the country's history. KKR characterizes the offering as producing record-breaking returns.
Finally, KKR points to Minnesota Rubber and Plastics, a thermoplastic solutions engineer that it owned for just over three and a half years. During COVID-19, KKR built a global innovation center, completed two bolt-on acquisitions, and launched an employee ownership program before selling MRP to Trelleborg AB in August 2022. The article concludes that disciplined, repeatable processes and companies that many buyers want to own are central to returning capital consistently. This is a manager-authored promotional perspective, and its performance claims are not independently verified in the article.
KKR outlines four principles: planning early for exits, embracing multiple ways to win, taking a creative approach, and driving value creation. According to the firm, nearly 60% of its private equity exits have been sales to either a strategic corporation or a sponsor. KKR says it avoids binary-outcome companies in favor of durable business models, applies a linear deployment approach to exits rather than relying on market timing, and generally looks to monetize once about 80% of its operational improvement goal is reached. Its target hold period is five to seven years.
The firm cites Bountiful, a North American vitamins and supplements provider it acquired in 2017. With KKR Capstone support, Bountiful strengthened its R&D, streamlined manufacturing, and professionalized its health supplements segment. By 2021 it had achieved double-digit sales growth, and KKR Capital Markets began preparing an IPO. Nestlé expressed interest, conducted full due diligence, and submitted an offer before the roadshow, leading KKR to sell Bountiful to Nestlé in early 2021.
KKR also describes Kokusai Electric, a Japan-based semiconductor equipment maker formerly a Hitachi subsidiary. A planned strategic merger failed because of regulatory challenges, and KKR later delayed an IPO following volatility linked to the Russia-Ukraine conflict. KKR says it pursued a "buy complexity, sell simplicity" thesis, boosting R&D, expanding margins, increasing global headcount by over 30%, and introducing an employee ownership program. The Tokyo Stock Exchange IPO in 2023 was, according to KKR, the largest in Japan since 2018 and the biggest private equity-backed IPO in the country's history. KKR characterizes the offering as producing record-breaking returns.
Finally, KKR points to Minnesota Rubber and Plastics, a thermoplastic solutions engineer that it owned for just over three and a half years. During COVID-19, KKR built a global innovation center, completed two bolt-on acquisitions, and launched an employee ownership program before selling MRP to Trelleborg AB in August 2022. The article concludes that disciplined, repeatable processes and companies that many buyers want to own are central to returning capital consistently. This is a manager-authored promotional perspective, and its performance claims are not independently verified in the article.
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