Deals
Private Equity's Golden Age Wasn't So Golden After All
- Buying spree heralded by KKR has yielded mediocre returns
- Investors would have fared better with money in an index fund
KKR & Co. Co-Founder Henry Kravis.
Photographer: David Paul Morris/BloombergThis article is for subscribers only.
Henry Kravis called it private equity’s golden age. From 2005 to 2007, buyout firms paid fat prices to buy about 20 supersized companies, from Hilton Worldwide Holdings Inc. to Hertz Global Holdings Inc.
Now, a decade later, the results of that debt-fueled spree can be tabulated -- and it’s hardly golden. The mega-deals produced mostly mediocre returns, falling well short of the profits that leveraged buyout shops typically seek, according to separate compilations by Bloomberg and asset manager Hamilton Lane Advisors. In more than half the deals -- each valued at more than $10 billion -- the firms would have been better off if they had put their investors’ money into a stock index fund.