KKR has unveiled a $3 billion exit – which returned 10x its initial equity investment – with a significant employee ownership angle.
The firm is selling CHI Overhead Doors, a manufacturer of garage doors, to steel company Nucor after around seven years of ownership. When the deal completes, employees in the business will benefit from an average payout of $175,000.
Pete Stavros (pictured above, right), co-head of Americas private equity at the firm, told 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”.
When KKR acquired the business in 2015, all 800 employees were made owners of it. “This was a free, incremental benefit for anyone earning less than $100,000 and was not in exchange for benefits, wages or wage increases,” said KKR in a statement about the sale.
The equity grant was part of wider employee engagement programme, which saw employees direct a budget of circa $1 million per year to improve the work environment among other initiatives.
On completion of the deal, employees will also have access to a year’s pre-paid financial planning and tax advice from Goldman Sachs Ayco Personal Financial Management and Ernst & Young. While financial education has been part of the ongoing programme, this is the first time that employees have benefited from a “consolidated big push” at the moment of a payout. “That’s a game changer,” said Stavros.
Stavros was gifted a chicken (above) by CHI’s employees as a thank you. This was the second “thank you” chicken, the first having been given to Stavros at the original equity grant back in 2015.
“We can’t thank our strategic partners at KKR enough for believing in us at CHI, providing a life-changing experience for us all and driving a movement not only across the industry, but across the industry,” said CHI CEO Dave Bangert.
Stavros’ team at KKR has been at the forefront of a movement to include portfolio company employees in the equity upside of private equity buyouts. In April this year, the firm became a founding partner of Ownership Works, a non-profit with a mission to support public and private companies transitioning to shared ownership models.
“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.”