Ken Mehlman recently sat down with Cristina Alesci for Super Return TV in Boston to discuss different aspects of private equity, operational expertise, and General David Petraeus joining KKR. They began by talking about what it is that makes KKR stand out among all the other private equity firms.
According to Mehlman, “I think that one of differences we bring to the table is we have 60 in our firm who are operational experts. One gentleman is an expert at Lean Six Sigma, someone else is an expert in purchasing…and these 60 people go into the company, typically for an 18-24 month period, and focus with that company on the specific area we think that that company can be operationally enhanced.”
When asked “Why the focus on operations? Why does it seem to be the hot topic?” by Alesci, Ken Mehlman talked about how private equity is really about problem solving and improving companies. He said, “Operational focus takes this alignment to the next level.”
The question he feels is important to ask is what type of return on investment your company is getting. Mehlman posits that it is a question that can be answered in a direct, deliberate manner. He says the way to figure that out is to look at the investment of thesis, perform regular oversight of your portfolio, pay attention to metrics, employ experts, and don’t be afraid to review and revise when necessary.
Alesci and Mehlman then switched topics to discuss the fact that KKR is joining up with General Petraeus to form the KKR Global Institute. Mehlman seemed excited about the upcoming joint venture and that Petraeus would be helping KKR to become even stronger.
“General Petraeus will lead an effort…[to] build on the work that my colleague Henry McVey and I have tried to do over the last five years, which is to help us understand macroeconomic, geopolitical, governance, environmental, regulatory, external factors that in today’s world are really important to the success of an investment or the failure of an investment, and are really important to helping our companies do even better and be better citizens.”