Pete Stavros, partner and co-head of Americas private equity at KKR, is a pioneer of the shared ownership model. Stavros and his team have been at the forefront of a movement to include portfolio company employees in the equity upside of private equity buyouts, with these efforts garnering Stavros the ‘Game Changer of the Year’ accolade in Private Equity International’s 2020 Annual Awards.
One such example of employee ownership in action is CHI Overhead Doors. In May, KKR unveiled a $3 billion exit for the garage door manufacturer, which returned 10x its initial equity investment. Upon completion of the sale in June, all 800 employees benefited from an average cash pay-out of $175,000 from their equity in the company.
Stavros told affiliate title New Private Markets that revealing details of the deal to employees in person was “one of the most joyful things I have been involved in in my life”.
“CHI is a powerful testament that creating a culture of ownership works,” said Stavros. “We have seen first-hand the impact that the ownership mindset can have on individual owners and the business. When you invest in employees, positive results will follow.”
Stavros’ passion for employee ownership looks set to have a far-reaching impact. Earlier this year, he founded Ownership Works, a non-profit with a mission to support public and private companies transitioning to shared ownership models, which had already garnered support from more than 60 investors, asset managers, advisers and service providers upon its launch in April.
Henry Kravis and George Roberts
Cousins Henry Kravis and George Roberts have left an indelible mark on the private equity industry. Along with the late Jerome Kohlberg, they co-founded Kohlberg Kravis Roberts in 1976, where they began pioneering leveraged buyout transactions.
Kravis and Roberts cut their teeth at Bear Stearns before leaving to launch KKR. During the firm’s first few years, the pair oversaw numerous market-shaking acquisitions, including the first buyout of a public company by tender offer in their acquisition of Malone & Hyde in 1984, and their investment in household-name retailer Safeway in 1986. But perhaps their most well-known deal involved RJR Nabisco, which was acquired by KKR under their supervision in 1989. The $31.4 billion buyout was the largest in history at the time, and it prompted Ted Forstmann, whose buyout firm Forstmann Little had initially expressed interest in bidding for the business, to call his rivals “barbarians” – one of the most memorable monikers in PE.
When PEI compiled its ‘100 industry influencers’ list in 2011, it included Kravis and Roberts in the top five, dubbing them “transformers”. Their dedication to making and not following trends has seen their firm go from strength to strength. Under their leadership, as of 30 September 2022, KKR had completed some 685 PE portfolio company investments and add-ons with a total value of more than $693 billion.
KKR’s scope has also expanded to the point where describing it as a ‘PE firm’ no longer does its operations justice. The firm, which had $496 billion in AUM as of 30 September 2022, now also manages credit, infrastructure, real estate and energy investments, among others.
In October 2021, the industry titans announced that, after 45 years as co-chief executives, they were stepping down from their roles, but would remain involved as co-executive chairmen of KKR. In a joint statement, Kravis and Roberts said: “Whether reflecting on the business, our mission or the team that undertakes it, we are proud of what we have built to support companies and serve our clients over the last four and a half decades.”
Kathleen Bacon, Cécile Belaman, Jennifer Dunstan, Dana Haimoff, Lori Hall-Kimm, Alexandra Hess, Kathryn Mayne, Emma Osborne, Christina Pamberg, Hanneke Smits, Helen Steers and Sasha van de Water
In 2015, a group of 12 private equity professionals co-founded the non-profit organisation Level 20 with the aim of improving gender diversity in European PE. The goal was to see women hold at least 20 percent of senior investment positions in the industry.
Since its inception, Level 20 and its co-founders have championed diversity, equity and inclusion in the asset class, galvanised efforts to better recruit, retain and promote women across the industry, and put DE&I squarely on senior leaders’ agendas.
Private Equity International’s Carmela Mendoza caught up with some of Level 20’s co-founders to find out more about its inception and what’s next for the organisation.
“When we got together in 2015, we did not feel there was a lot of women in senior leadership in private equity,” Jennifer Dunstan, a co-founder of Level 20 and partner and head of fund investor relations at 3i, tells PEI.
“We looked back 15, 20 years and were very alarmed that we could not see a change in the number of women represented at the senior level. That was a lightbulb moment that we needed to do something to change that and to find a way of bringing women together,” she says.
Seven years later, Level 20 has flourished from its initial co-founding team of 12, to over 4,000 individual members across 12 chapters in Europe. Its executive team, led by CEO Pam Jackson, has grown to 10.
Emma Osborne, a co-founder of Level 20 and a member of the executive advisory council at New Mountain Capital, says that one of the ambitions of the founding group was for younger women to access the support and inspiration that they had given each other over many years through professional and personal challenges. As a result, mentoring and networking are among Level 20’s core activities. To date, over 700 women have participated in Level 20’s mentoring programmes. An analysis of the first five years of the UK cohort showed that 96 percent are still in the industry – “a very high retention rate and a testament to the effectiveness of our initiative”, Osborne says.
“We always knew that we would need to include men in the conversation to have any hope of effecting change in the industry. Our ethos has therefore always been inclusive, aiming to support and guide rather than criticise,” says Osborne.
Along with mentoring, Dunstan notes that collecting diversity data, carrying out research and feeding that back into the industry is an important aspect of the organisation’s work. “This is not a women’s-only network. This is about including everybody in the industry and working together to make sure that we can really change the landscape and have a very positive impact on the numbers of women working across the industry.”
She notes that this is mainly about providing GPs with access to information and resources that focus on attracting, retaining and promoting women in private equity. Says Dunstan: “If you are a smaller scale firm, for example, and you are trying to work out what parental leave policies are operating in other firms, we provide access to them. There are a lot of practical things that GPs can do.”
Helen Steers, a co-founder of Level 20, a partner in Pantheon’s European investment team and senior manager for its listed global private equity investment trust, says a key turning point in the organisation’s journey was the realisation that the appetite for membership and the subsequent demand for services – including the mentoring scheme, research projects and programme of events – vastly exceeded the founding group’s expectations. “We significantly underestimated the work involved in starting up a new non-profit organisation, staffed and run entirely by volunteers, all of whom had day jobs! Very fortunately, our first chair, Hanneke Smits, was able to dedicate more time to Level 20, and really kick-started the initiative.”
Taking in sponsorship from GPs in 2016 enabled Level 20 to professionalise and move away from a fully volunteer-run organisation. According to Steers, that breakthrough came when it became obvious that to do things properly, they could not rely on membership fees and had to think about long-term funding. Now the organisation has over 100 sponsors consisting mainly of GPs, as well as LPs.
What of its core objective to increase the number of women working in senior investment roles in the industry to at least 20 percent? Its European Gender Diversity Report 2022 found that 20 percent of investment professionals in European PE and VC are women, but that figure falls to just 10 percent at the senior level. The report revealed, however, that more than a third of investment professionals at the junior level are women – a positive sign that diversity levels could rise in the future if action is taken to retain and promote female talent.
“Level 20 is doing so much on so many different levels that this target is not the be-all and end-all,” says Dunstan.
Where does Level 20 go from here, we ask. Dunstan says they have to keep evolving and developing, with more to do on the international side.
“Eventually it is important to have one umbrella organisation for the industry. The journey is far from over. But we have made great progress and it has been a very exciting journey so far.”
Wol Kolade has spent almost 30 years at UK-headquartered mid-market buyout house Livingbridge. Alongside his role as managing partner at the firm, Kolade has held various industry and charitable roles. In 2007-08, he was chair of the British Private Equity and Venture Capital Association, and today he is deputy chair of NHS England and sits on multiple advisory boards, including that of diversity-focused non-profit Level 20.
Throughout his career, Kolade has been working to drive change across the asset class and the sectors it invests in. Following the murder of George Floyd in May 2020 by a police officer in the US, and the subsequent civil unrest, Kolade penned an open letter. In it, he said he would be asking his colleagues and fellow board members “to look again at the steps being put in place to address the shockingly low representation of BAME leaders in private equity, business and healthcare”.
What followed was the founding of 100 Black Interns alongside Michael Barrington-Hibbert, chief executive of recruitment firm Barrington Hibbert Associates, entrepreneur Dawid Konotey-Ahulu and Capstone’s president, Jonathan Sorrell. The goal was to offer 100 internships to Black students and recent graduates in investment management. In a matter of months, the programme had been enlarged to 10,000 Black Interns, offering internships that today span over 25 sectors.
“Black talent would not have seen private equity as a place to come, mostly because they look around and see very, very, very few who look like them,” Kolade tells PEI. “What this has done is demystify private equity. [It gives private equity] access to really talented people… and has made it a viable, credible career choice. That’s really helpful.”
The firms participating in 10,000 Black Interns include blue chip names as well as some “really small firms”, which Kolade says, “is the big thing”. “This is not just the big boys doing it because they ‘can afford it’. The whole industry is saying we have a problem.”
Although the programme is “a very visual, very impactful, very quick way” to address the problem, it does not address the whole issue. “As my colleague Dawid [Konotey-Ahulu] likes to say, ‘we’ve unkinked one part of the hose pipe with talent to the top. There are other kinks which we need to address’.
“But if we get it right, it helps you to accelerate change in your firm,” Kolade adds. “I think that’s the thing that people would say [about the programme] – it accelerated change in their firm.”