Jerome Kohlberg Jr. facts for kids

Jerome Kohlberg Jr. (born July 10, 1925 – died July 30, 2015) was a smart American businessman and investor. He was one of the first people to really get into "private equity" and "leveraged buyouts." These are ways of buying companies, often using a lot of borrowed money. He helped start a very famous company called Kohlberg Kravis Roberts & Co. (KKR) and later started another firm, Kohlberg & Company.

Early Life and Education

Jerome Kohlberg grew up in New Rochelle, New York. He graduated from New Rochelle High School. He served in the United States Navy during World War II. After the war, he used the GI Bill to go to college. He earned his first degree from Swarthmore College. Later, he got a business degree (MBA) from Harvard Business School and a law degree (LLB) from Columbia Law School. In 1986, he started a scholarship fund at Swarthmore College.

A Career in Business

Starting Kohlberg Kravis Roberts & Co.

Kohlberg started working at Bear Stearns in 1955. There, he managed the corporate finance department. In the late 1960s and early 1970s, Kohlberg and other Bear Stearns executives began to advise on special investments. They called these "bootstrap" investments.

One of their first big deals was buying Orkin Exterminating Company in 1964. This is seen as one of the first important "leveraged buyouts." A leveraged buyout means buying a company mostly with borrowed money. Over the next few years, they bought several other companies.

Kohlberg, along with Henry Kravis and George Roberts, created special partnerships to buy these companies. They looked for businesses that weren't doing as well as they could, or that had hidden financial value. Often, their company, Kohlberg Kravis Roberts & Co., would put in about 10% of the money needed. The rest was borrowed from investors, often by selling high-yield bonds.

By 1976, there were disagreements between Kohlberg, Kravis, and Roberts and their company, Bear Stearns. The leaders at Bear Stearns didn't want them to create a special investment fund. So, the three decided to leave. In 1976, they formed their own company, Kohlberg Kravis Roberts. Early investors included the Hillman Family Group. By 1978, KKR raised its first large fund, getting about $30 million from investors.

Founding Kohlberg & Company

In 1987, Kohlberg left KKR. He had different ideas about how the company should grow. Henry Kravis and George Roberts then took full charge of KKR. Kohlberg didn't like the idea of very large buyouts or hostile takeovers, which are when one company tries to buy another against its will.

Instead, Kohlberg wanted to go back to buying smaller, mid-sized companies. So, in 1987, he started a new private equity firm called Kohlberg & Company. By the end of 2007, Kohlberg & Company had raised about $3.7 billion from investors. Kohlberg retired from Kohlberg & Company in 1994.

Jerome Kohlberg Jr. passed away from cancer on July 30, 2015. He died on Martha's Vineyard in Massachusetts, just 20 days after his 90th birthday.

Giving Back

Kohlberg was also known for his charity work. He supported many good causes through the Kohlberg Foundation.

See also

• History of private equity and venture capital