Better Capitalism in Action - Peter Stavros of KKR
The ethic of mutuality – pursuing self-interest as well as the interest of others – is a core tenet of what we term Partnership Economics and advocate is the gateway to better capitalism. We are thrilled, perhaps even giddy, when we find real-time examples of mutuality, Partnership Economics, and people making progress toward better capitalism.
If any of this post appears to gush over the news of Peter Stavros (Co-Head of Americas Private Equity at KKR) and the KKR – C.H.I. Overhead Doors (“C.H.I.”) sale to Nucor Corp, you’d be right. Though we seek to keep gushing in check, we too are only human and susceptible to admiring leadership heroes and amazing results. You’ll rarely see the overworked and abused word “amazing” in these Better Capitalism posts, but what word better describes the C.H.I. journey since 2015 as influenced by Peter Stavros?
Peter Stavros | Image Credit KKR
By way of a quick orientation to this luminary example of better capitalism, in 2015 KKR paid $600 million to acquire the Arthur, Illinois-based C.H.I. In May 2022 KKR announced the $3 billion sale of C.H.I. to Nucor, scheduled for Q2 2022 or early Q3 2022, subject to regulatory approvals. Regarding the rest of the story, the devil – or God – depending on which version of the phrase you most frequently use, is in the details.
Here are the contours of those details, from 2015 to present, courtesy of Cara Major of KKR and Businesswire:
KKR acquired C.H.I for $600 million
KKR, under Stavros’s co-leadership, focuses on employee ownership and engagement as a key driver to building companies and driving greater financial inclusion
Upon acquisition of C.H.I. all of its 800 employees were made owners
Ownership was a free benefit for anyone earning less than $100,000/yr
Employees were given a voice in production and organizational improvements
Safety improved substantially and severity of injuries declined by more than 50%
Wages increased 12.5% in 2021 and 7% in 2022
C.H.I. EBITDA increased almost 400%
C.H.I. EBITDA margin increased from 21% to 30%
C.H.I. revenue grew by nearly 120%
C.H.I. built a second plant in Indiana
KKR announced the agreement to sell C.H.I. to Nucor for $3 billion
At 10 times the original equity invested, this sale will be one of KKR’s most profitable in recent history
On average each CHI employee will receive, in addition to dividends already paid, a cash payout on their ownership interests or equity of approximately $175,000 each, with tenured employees earning up to $400,000
All told, an estimated $360 million will be distributed to the 800 employees of C.H.I.
All 800 employees will receive a year of pre-paid personal financial coaching and tax preparation services to help successfully manage their equity payouts
With Nucor’s acquisition, C.H.I.’s leadership team, led by CEO Dave Bangert, is expected to continue the business under the C.H.I. name.
Employee morale is reportedly high as they transition to Nucor
Speaking of the C.H.I. journey, Stavros is quoted saying, “C.H.I. is a powerful testament that creating a culture of ownership works. 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. … Together, we have exceeded our goals, delivered for C.H.I customers and supported each other and our community.” Bangert is quoted saying, “We can’t thank our strategic partners at KKR enough for believing in us at C.H.I., providing a life-changing experience for us all and driving a movement not only across the industry, but across the country.”
We at Better Capitalism are thrilled about the success experienced by Peter Stavros and KKR as they contextualize an ethic of mutuality in the form of a shared ownership model, and wish them every continued success. Now, within your context and your realm of influence, how might you and your company begin to contextualize an ethic of mutuality and make the transformative move to better capitalism? We’d love to hear of and share your success making that move.
What about you? Share your story, question, comment, idea, disagreement -- yes, we welcome disagreement for the sake of mutual benefit! -- with us at blog@PartnershipEconomics.com. We will give a thoughtful response, with prioritized attention to emails from our subscribers. Subscribe here >>
Our 2021 Amazon #1 New Release: unleash more with Better Capitalism: Jesus, Adam Smith, Ayn Rand, & MLK Jr. on Moving from Plantation to Partnership Economics.
Buy now, or get a free sample here >>