How has private equity investing changed over time?
SUMMARY
INTRODUCTION
When Henry Kravis, George Roberts, and Jerome Kohlberg founded KKR in 1976, private equity as we know it today barely existed. Their strategy was straightforward: acquire businesses that could be improved through professionalized management, stronger incentives, or carve-outs from sprawling conglomerates. Firms trading at lower valuations often offered more scope for improvement. With limited capital of their own, KKR relied heavily on leverage to amplify returns. In factor terms, early private equity resembled investing in cheap small-cap stocks with steady cash flows.