“You should meet Henry.” 

So it unfolds, at the Gatsby-esque Deepdale Golf Club, on Long Island’s Gold Coast -- a story that, for better and worse, is still reverberating through corporate America decades later. 

The Henry is Henry Kravis of KKR & Co., and the deal being hatched there on the clubhouse terrace -- the audacious 1988 takeover of RJR Nabisco, then America’s 19th largest industrial company -- would come to symbolize the Decade of Greed and the wildly lucrative business that Kravis would spend the rest of his career mastering: private equity. 

By now “Barbarians at the Gate,” the book and movie about the epic RJR battle, has faded into near-legend. The famous leveraged buyout was three decades ago, after all. But as Kravis, now 77, officially hands the reins of his storied firm to a new generation of executives, the industry he helped pioneer has arrived at another pivotal moment. 

In a business of big money and bigger egos, the old guard is finally, at times begrudgingly, letting go. New leaders are taking over an industry that has infiltrated nearly every corner of the nation’s economic life -- at times, its critics contend, at the expense of workers and corporations. Private equity has grown bigger and more powerful than its early founders could’ve possibly imagined. In Washington, Democrats want to close the tax loopholes that have helped to make Kravis and his fellow buyout tycoons billionaires. 

Kravis and his cousin, George Roberts, 78, on Monday announced the change of leadership at KKR, which they founded in 1976 with their one-time boss Jerome Kohlberg Jr. Scott Nuttall and Joe Bae, who were marked as successors four years ago, assumed co-chief executive officer roles with immediate effect. 

It’s the third seismic change at the top of the private equity world this year. At Apollo Global Management Inc., Leon Black gave way to co-founder Marc Rowan after a months-long controversy over his connections to Jeffrey Epstein made his position untenable. 

TPG said in May that Jon Winkelried would become the sole CEO as his counterpart, co-founder Jim Coulter, shifts focus to its fast-growing impact investing business. Former Goldman Sachs Group Inc. executive Winkelried joined TPG in 2015. Co-founder David Bonderman became chairman in 2014.

Other firms have also moved between the generations. Carlyle Group Inc. co-founders David Rubenstein and Bill Conway ceded their roles as co-CEOs to Glenn Youngkin and Kewsong Lee in 2018; Youngkin has since left (and is running to be Virginia governor), leaving Lee in sole charge of the firm. 

One notable holdout: Steve Schwarzman, the founder and CEO of Blackstone Inc., still holding tightly to the reins in his 36th year of running the firm.



KKR said in 2017 that Nuttall, 48, and Bae, 49, would assume the newly formed roles of co-presidents and co-chief operating officers, responsible for day-to-day operations -- a clear sign of their ascendancy.

The pair joined KKR in 1996 and focused on different areas of its development. Bae moved to Hong Kong in 2005 to spearhead expansion in Asia, returning to New York in 2015.

Nuttall emerged as a leader as KKR listed on the NYSE in 2010 after merging with a publicly traded fund it managed. He led the firm’s quarterly public reporting in the years following, speaking to shareholders and analysts instead of Kravis or Roberts. He also oversaw expansion of the credit, capital markets, hedge fund and fundraising groups.

Kravis and Roberts are handing over the reins following a robust period of growth. Assets soared following the acquisition of insurer Global Atlantic Financial Group, and fundraising has boomed -- KKR raised US$59 billion in the second quarter, blowing past the prior year’s record. 

The firm has been one of Wall Street’s most acquisitive buyout shops during the pandemic, with a focus on technology-related bets. At an investor day earlier this year it set a goal of raising more than US$100 billion by 2022, and said it was either in the market with or planning to raise capital for more than 20 strategies this year and next. Assets under management at mid-year were US$429 billion. 

KKR’s shares were up 1.8 per cent at 10:00 a.m. in New York trading Monday. The stock has gained 62 per cent this year through Oct. 8.



It’s a far cry from the 1970s, when the cousins, then working at Bear Stearns, put up US$10,000 each to go along with US$100,000 from Kohlberg to start a buyout firm.

Kohlberg Kravis Roberts & Co. opened in 1976, specializing in pioneering takeovers that were leveraged buyouts done on a friendly basis, keeping management in place with an equity stake. But in 1987 Kohlberg left, opposed to the hostile acquisitions Roberts and Kravis began proposing, and the firm was eventually renamed. 

The deal that made Kravis and Roberts -- and their business -- known beyond Wall Street was the 1988 battle for RJR, a US$30 billion hostile takeover that was the largest leveraged buyout at the time.

“Barbarians at the Gate,” written by Bryan Burrough and John Helyar, told the story of RJR CEO F. Ross Johnson’s plan to acquire his tobacco and food conglomerate, maker of Oreo cookies, Ritz crackers and Winston cigarettes. KKR put in a competing bid. After a six-week struggle that captured daily headlines, KKR won, besting many Wall Street giants.

Beyond RJR, KKR and its investors have taken over dozens of household names including Safeway Stores Inc., Playtex Products Inc., Duracell Inc., Toys “R” Us Inc., Borden Inc., First Data Corp. and Regal Entertainment Group.



Roberts was born on Sept. 14, 1943, in Houston; his father and Kravis’s mother were siblings. He graduated from Claremont McKenna College in 1966 and earned a law degree from University of California Hastings College of Law.

Kravis was born on Jan. 6, 1944, in Tulsa, Oklahoma. In 1969, he earned a Master of Business Administration from Columbia University.

Roberts, who once described Kravis as the “social animal” of the pair, operated from the firm’s office in Menlo Park, California, while Kravis was in charge of the New York headquarters.

Their success with KKR has made them both among the world’s richest people, with each of man valued at about US$11 billion, according to the Bloomberg Billionaires Index.

Kravis, a near scratch golfer, has used his wealth to acquire art and donate to charities, such as his former schools, public television and hospitals. He had a wing named after him at the Metropolitan Museum of Art in New York.

Roberts gave a gift of US$50 million in 2012 to help pay for a recreation and events facility at Claremont McKenna, named the Roberts Pavilion. A separate gift of US$25 million was earmarked to bolster the school’s computer science resources. He also endowed the Roberts Enterprise Development Fund, which provides technical assistance and funding to nonprofit organizations.