The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
why aren't all 36 resolved? a statement only gets an assessment when the public record can support or contradict it. opinions and what-ifs never can, and 0 checkable ones are still open, waiting for their date. predictions held up or didn't; assertions are supported or contradicted. on every card: ▮▮▮▮▮ certainty · ▮▮▮▮▮ debate potential. speakers are clickable
Stavros: Private equity makes a mistake by concentrating equity in management
“I think private equity is making a mistake by aggregating all the economics in such a sliver of the company. We would all be better off as investors put aside the good to society by more evenly distributing it because the senior people are going to quickly tap…”
Stavros: C.H.I. Employee Ownership Paid $175K Average, Up to $1M
“So the end payouts ended up being 175,000 on average, and we had hourly workers and truck drivers make almost a million dollars.”
Stavros: Frontline Equity Must Be Free, Never Shifting Risk to Workers
“And you can't ask people who make less than a 100,000 dollars to invest in the company. That needs to be an entirely free incremental benefit. This is not about shifting risk onto workers.”
Stavros: Employee equity programs need at least six months of upside
“For this to work, people need to see a path to at least six months of their income with upside, hopefully a year of income on average.”
Stavros: KKR preempted C.H.I. auction by offering a 72-hour contract
“At first round bids, we had a final round type offer. Our price was certain. We submitted a term sheet on a contract and we said, we'll sign this in 72 hours.”
Stavros: KKR Exits Investments Once 80% of Plan Is Achieved
“Likewise, on the exit side, once we've achieved 80% of what we came to do, we start to head for the exits, as long as the markets are reasonable. We're not trying to say, well, now's the perfect time to sell, but as long as you look at the markets, you say it'…”
Stavros: Stock Grants Alone Do Not Change Frontline Worker Behavior
“It's not just you hand out stock and people all of a sudden change behaviors. It's a lot of work, a lot of communication, financial education.”
Stavros: Acquirers valuing employee culture will pay the winning price
“The people who value this culture are the ones who are going to pay the high price. So somebody who's maybe more of a slash and burn corporate buyer, I'm going to make this up. We didn't have one of those in the field, but they're not going to pay the winning …”
Stavros: Executive performance declines at high compensation due to risk aversion
“As comp goes up, I do think performance goes up. People are less likely to quit. It levels off faster than we think that they have enough because people don't really work for money. And then I think performance declines. People get risk aversed. If somebody's …”
Stavros: Going public did not change KKR's investing culture
“So I would say for an investor at the firm, being public really hasn't changed much other than giving the firm access to permanent capital that we can then go use to build out and seed new strategies.”
Stavros: Incumbents Couldn't Match C.H.I.'s Flexible Model Without Rebuilding Plants
“CHI was able to start its operating model from scratch, and they built a really flexible operating system where they could deliver on very short lead times, very high variety. It was just not possible for a competitor to adapt unless you were going to shut dow…”
Stavros: Unmeasured engagement and avoided eye contact signal plant disengagement
“Engagement was not measured. That's always a dead giveaway when you ask what the engagement scores are like, and they're just not even measured. So there was no input coming from the workforce. And even walking through a manufacturing plant when people don't m…”
Stavros: KKR raised preemptive C.H.I. bid four times to $680M
“So we bid six hundred and twenty-five million and said we could sign in 72 hours. And they said, that's great. Glad you love it. We're not in that big of a hurry. We suggest you keep playing out the process. Six 50. Six 70. Six 80. I remember I sent an email, …”
Stavros: Private equity buyers must stick to 'final offers' to preserve market credibility
“Whenever you say this is it, it's kind of got to be it.”
Stavros: Preemptive buyout bids succeed more in shaky markets than hot markets
“If it's a super hot market, sellers are like, why would I do this? Who knows what's going to come out of the woodwork? If it's a little shakier and people see real value in speed and certainty, it's more likely to work out.”
Stavros: Plant safety issues and product quality problems closely parallel each other
“And it's interesting how much you will find parallels between safety issues and quality problems, because they both speak to the process in your plants.”
Stavros: PE sponsors cannot dictate actions if holding management accountable for results
“You can't tell people what to do because you can't hold them accountable. So what we try and say is here's the opportunity we see. All we care about is getting the opportunity, and we want to get it in the right way.”
Stavros: Direct investor involvement inside operations makes board meetings much more productive
“I do think it's helpful if you have involvement from the people who have made the investment, who chair the board, who sit on the board, to also be in the business. By the way, it makes the board meetings way more productive when people are like, I know exactl…”
Stavros: PE deal speed prevents precise pre-acquisition operational data analysis
“You have to move so quickly to win in this world. So you have clues. But you don't have the access to data and the time if you're going to be effective in winning these assets to be like, well, I got to get to the one decimal place.”
Stavros: C.H.I. EBITDA Grew Organically from $60M to $130M
“We went from 60 of EBITDA in 1516 was great, 17 was great, 18 was great, 19 was great. We were, I don't know, 130 of EBITDA from 60. All organic, no acquisitions.”
Stavros: KKR Bought C.H.I. at 13x and Exited at 14x EBITDA
“I think we paid 13 times on entry and on exit 14 times or something. There was not a huge uplift in multiple.”
Stavros: 600 C.H.I. employees received a 3.5% option pool
“I think it was three and a half percent of the company in options. Of the 800 folks, maybe the top 200 got outright grants, made meaningful investments in the company, and were traditional management equity plan participants, as you would normally think of it.…”
KKR has 25 active broad-based employee ownership programs across US portfolio
“We started that about 12 years ago. Extended that across our entire industrials portfolio over a period of time, so we've done it maybe 12 times with manufacturing businesses, and then in total today have 25 live cases of this across all of our different verti…”
Stavros: Ingersoll Rand reduced quit rates from 20% to 2%
“It was Ingersoll Rand where the quit rate went from 20% a year to two percent, and the engagement scores went from the 19th percentile to the 90th.”
Stavros: C.H.I. Grew Revenue 120% While Scrap Rose Only 7%
“Revenue was up a 120%. You took all this market share, lead time advantage versus the competition gapped out massively. Despite the 120% revenue growth, scrap only grew seven percent.”
Stavros: Top PE firms each control up to one million employees
“Or in a more concentrated way, could you convince Blackstone, Carlyle, TPG, Apollo, Aries, Warburg, Pincus, Bain, a handful of companies which each control half a million, million employees.”
Stavros: KKR Rejects Deals Lacking Clear Transformation Catalysts
“The ethos of our strategy in US private equity is around transformations. We're looking for good companies that we can inflect in a meaningful way and transform maybe operationally, maybe through acquisition or growth, maybe strategic repositioning, top gradin…”
Stavros: About a Quarter of C.H.I.'s Workforce Is Amish
“This is Amish country about quarter of the workforce is Amish.”
Stavros: C.H.I. had 21% EBITDA margins and mid-single-digit growth at acquisition
“The rough economics of CHI overhead doors when we bought it were 20% or so EBITDA margins. I think they were 21% gross margins in the low thirties, solid mid single digit growth. It had been a steady, slow market share gainer.”
Stavros: KKR wrote a $250M equity check for C.H.I. Overhead Doors
“Even when we bought this was really a mid-cap deal for us, and we had always had a thought we would start a mid-cap strategy, so we were happy to do it, but this was a two hundred and fifty million dollar equity check, and our fund sizes are many, many billion…”
Stavros: I did four annual shop-floor Kaizen events and toured Toyota plants
“I myself used to do four Kaizen events every year, a week of time working on a shop floor. We would go to Japan for 10 days at a time, and we would have the founders of the Toyota production system take us around to a dozen of the world-class lean plants in th…”
Stavros: C.H.I.'s OSHA recordable incident rate was 14 per 100 workers
“The injury recordable incident rate, which is OSHA's key metric of safety, was 14 at the time, so what that means is for every hundred people in the plant, how many people per year were getting hurt? It was 14 out of a hundred per year.”
Stavros: C.H.I. Frontline Workers Received $9,000 in Interim Dividends
“Over the years, we paid four dividends. Those dividends amounted to about 9000 dollars per employee.”
Stavros: Nucor plant workers made roughly $35k in profit sharing last year
“If you look at their financials, I think their manufacturing plant employees made last year on top of their wages, like 35,000 dollars in profit sharing, a lot of money.”
Stavros: About 20 PE firms have committed to Ownership Works
“So we've got about 20 private equity firms signed up, and by signed up, I mean they're committed to doing this at least a few times in their portfolio, following our standards, and then sharing some data back to the nonprofit so we can track where's the money …”