Legendary private equity chief Henry Kravis said it was "scary" when Donald Trump floated his name as a possible Treasury Secretary if he were to be elected president. 

"That was scary when he said that," Kravis said at Fortune's Brainstorm Tech conference in Aspen on Monday, according to Bloomberg News.

Kravis, 71, and the firm he co-founded, KKR, were immortalized in the bestselling-book "Barbarians at the Gate," which chronicled the historic leveraged buyout of tobacco/food company RJR Nabisco. 

Shortly after Trump launched his campaign, he appeared on MSNBC's "Morning Joe." On the show, the billionaire real-estate magnate said that he knows "the smartest guys on Wall Street" and the "best negotiators." 

"I know the overrated guys, the underrated guys, the guys that nobody ever heard of who are killers who are great. We've got to use those people," Trump said.

When asked who he would pick for Treasury Secretary, Trump responded: "I'd like guys like Jack Welch. I like guys like Henry Kravis. I'd love to bring my friend Carl Icahn, you know, I mean, we have people that are great...we don't use them, Joe. We use people who are soft, and weak, and frankly, stupid and incompetent."

Icahn already declined Trump's proposal. The famed billionaire investor wrote on his blog that he does "not get up early enough in the morning to accept this opportunity."

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In July, three companies that were targets of some of the largest ever leveraged buyouts — Univision, the Spanish-language broadcaster; technology company First Data; and supermarket Albertsons — filed to go public. 

The companies are also notable because they've been owned by private-equity funds for much longer than anticipated — as much as a decade in Albertsons' case.

An IPO filing is still a long way away from a clean exit: Even with a public listing it can take years for private-equity investors to sell down their shares and be done with an investment. 

In the wake of the financial crisis, so-called "hold times" at private-equity firms increased to an average of five to nine years for a North American company compared to an average time of 4.2 years before markets crashed, data from Preqin shows.

Hold times are the duration a private-equity-backed company sits in its owner's portfolio. Hold times have also irked some private-equity investors like state pensions after revelations of fee abuse at some of the industry's top firms. 

"I hate long hold times in private equity, personally," Don Vollum, managing partner at Vista Ridge Capital Partners, a private-equity investor based in Oregon, told Business Insider.

"That’s not to say that I want to see managers rush a company to market before it’s ready, but rather that the point of 'private equity' is to transform a company in a relatively short, fixed amount of time — three to five years, typically."

For private-equity firms, that's meant having to run businesses for much longer than they planned. In some cases, they've used the time to sell off pieces to manage a smaller business as they push toward an IPO. 

In other cases, big private-equity firms like TPG Capital and KKR found themselves facing problems they couldn’t strategize past. Deals like Harrah’s Entertainment and Energy Future Holdings went belly-up, costing sponsors billions in the process and making it harder for them to raise new funds in the aftermath.

Business Insider took a look at five deals that represent about $100 billion in invested capital to see how private equity is working through some of the transactions that proved most difficult in the wake of the financial crisis. 

In Equity Office, Blackstone trusts

Blackstone Group bet big on Equity Office Properties in 2007 and was fortunate to quickly flip a large chunk of the real estate after acquiring it for $36 billion. Blackstone has continued to pare down the assets in a series of sales, like last year's sale of $3.5 billion of California office buildings, and has now offloaded more than half of the properties it acquired in the original deal.

It is very likely the private-equity firm will reel in a profit on its Equity Office deal, in a similar fashion to how Steve Schwarzman’s firm won with its bet on Hilton Worldwide Hotels. That is, piece by piece.

One of the things that has made Hilton a successful deal is that the sponsor has sold stakes of around 10% in the company into what has been a rising market for its stock. Hilton also exited properties held within its own portfolio at a high valuation.

First Data was not Kravis' first post-crisis headache

KKR has had a tough time with some of its biggest deals, but Henry Kravis’ PE firm is on the verge of making a big exit more than seven years after acquiring First Data. It took a lot of extra homework and the attentive eye of Kravis himself to get there.

First Data's IPO filing shows that it hasn't recorded an annual profit since at least 2010 — as far back as the financial statements go. 

Seven years after the initial $27 billion buyout, KKR had to invest more than $1 billion to prop up First Data. The IPO will be a big test for KKR. After another of its mega-buyouts (Energy Future) filed for bankruptcy, it remains to be seen if Kravis’ PE firm will ever again do a deal north of the $10 billion mark again. 

Doubling down on the consumer could pay off at Albertsons

Rather than cutting down, like Blackstone has done with Equity Office, the owners of supermarket giant Albertsons have gone the other way — scaling up the business with acquisitions. 

The initial $9.6 billion buyout of Albertsons by Cerberus Capital Management dates back to 2005. It was followed by a handful of deals, most notably a $9.4 billion bid for Safeway that closed in January of this year. By July, the merged company had filed for an IPO. But it hasn’t yet disclosed a share price (crucial in determining valuation). Cerberus controls a majority stake leading up to the IPO. 

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Jerome Kohlberg was a gentleman in an age of 'Barbarians at the Gate.'

The founder of private equity firm Kohlberg Kravis Roberts & Co died on Thursday at his home in Martha's Vineyard, Massachusetts.

The death of the man who founded private equity giant KKR should serve as an opportunity for reflection at how much the business has changed in the fifty or so years since he pioneered the private equity investment model.

Kohlberg's mentality as a private equity investor was based in the tried-and-true operational improvement strategy. He wasn't a fan of financial engineering and he shunned mega-deals.

He put rates of return for his investors ahead of the size of his firm. 

"Jerry was a real visionary, having played an important role in developing the private equity model in the 1960's, and he was a true mentor to George Roberts and me," KKR co-founder Henry Kravis said in a statement provided to Business Insider. "Subsequently, he became an important factor in launching KKR, the first private equity firm, with George and me."

The firm was relatively insignificant when it first started out. KKR's first fund was $31 million, a paltry sum by today's standards. The returns however were incredible in the early years. KKR returned 22.5% on its 1980 fund, and nearly 40% on its 1982 fund. 

In 1987 Kohlberg left KKR in an surprising departure, telling his colleagues "We must all insist on ethical behavior or we will kill the golden goose." 

He went on to found private equity firm Kohlberg & Co., which didn't raise a fund in excess of $2 billion in 20 years of existence. 

At KKR, meanwhile, the fund bearing his name would successfully pursue what was at the time the biggest buyout in the history of the private equity industry.

The back-and-forth tale of the buyout of RJR Nabisco was chronicled in Wall Street tome 'Barbarians at the Gate' which earned the industry a nickname and reputation in finance that stuck with it for years. 

Under Kravis, who Kohlberg supervised in the 1970s at Bear Stearns, KKR went on to pursue enormous LBOs.

KKR has grown to manage a total of more than $50 billion today. Some deals, like an investment in energy firm TXU, have failed spectacularly. KKR's internal rate of return, judging by returns reported by Oregon's pension fund, have not matched the success the firm had in the years prior to Kohlberg's departure. 

The private equity giants of today are almost unrecognizable from the firm Kohlberg founded.

They have diversified from buyouts into the likes of real estate, loans and hedge fund trading. They have amassed billions in assets too. KKR rival Carlyle has more than $60 billion in dry powder to spend, for example.

The industry is expected to try and grow that cash pile by extending its efforts to attract money from retail investors and 401(k) portfolio managers. The fact that private equity has beaten returns on the S&P 500 with consistency is likely to add to its appeal. 

Those efforts are built at least on part on the work and reputation of Jerome Kohlberg. 

The industry's next generation of investors will be keenly aware if the 'barbarians' of today fail to match the standards set by the grandfather of the PE business -- namely that fund performance is the key point.

The example Jerome Kohlberg set running Wall Street's first private equity firm is a very hard act to follow, even for Henry Kravis.

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Private equity will soon see a changing of the guard.

The first generation of Wall Street’s Barbarians at the Gate have taken their firms public and charted out ambitious expansions into hedge funds, debt financing and real estate.

Now there is a new breed of private equity firms emerging: Advent International, KPS Capital Partners, Silver Lake and Vista Equity. 

Business Insider combed through private equity performance numbers maintained by U.S. pensions to highlight some of private equity's top performers. 

Both people who work in the asset class, and investors who put money into private equity funds say, these four firms are the industry's rising stars. 

Some from our list have carved out a specialized niche focus, like technology deals, or focused on operational overhauls. 

They also appear to have learned from their predecessors' mis-steps. Many big PE firms larded investments with debt in the pre-crisis years, with that debt later proving difficult to pay down. The likes of KKR and Blackstone did behemoth transactions leading up to the financial crisis, and in some cases have seen them amount to disappointing returns.

The new class of private equity up-and-comers has stuck to smaller, more conservative deals and focused on operational improvements. 

They’re also raking in impressive returns.

There are two ways investors gauge the performance of the private equity firms they back: internal rate of return (IRR) and investment multiple. The investment multiple relates to what the individual fund made back on its deals, while the IRR sets out what the fund made back on an annualized basis.

Here is what you need to know about the four firms:

Advent International's consumer plays have paid off

Advent is one of the bigger private equity firms to make the cut on our list. The firm, which has $30 billion under management, has built its reputation on mid- to large-sized acquisitions, buying out the likes of Bojangles’, Lululemon and The Coffee Bean & Tea Leaf. It has invested in over 300 private equity deals in more than 40 countries, according to its website. Led by managing partner David Mussafer, Advent has taken on ambitious expansion in emerging markets, as well, bolstering its reputation as an international player in private equity.

*Performance data for Advent funds prior to 2001 were not available.  

Silver Lake Partners is a specialist in investing in technology companies

Silver Lake Partners should be the most recognizable name on this list, in no small part due to their dalliance with Michael Dell’s company and the slugfest with Carl Icahn that was necessary in order to get complete the deal. But the private equity firm cofounded by Glenn Hutchins, Jim Davidson and Dave Roux had done plenty of successful tech deals prior to the transaction for which it is most famous. This includes buying into GoDaddy, Virtu Financial and Skype, to name a few. Silver Lake has racked up impressive returns over-the-year, and the Dell investment holds up, its most recent fund, which is also its biggest at $10.3 billion, could be its best. The PE firm has about $26 billion in assets under management.

Vista Equity is establishing a solid reputation

Founded by Robert F. Smith in 2000, Vista today manages $14 billion in total assets. The private equity firm raised its biggest fund last year, raking in $6 billion. The fund hasgotten creative in order to borrow more to buy target companies, taking loans from non-traditional lenders. The private equity firm’s portfolio flies below the radar, even in the heady tech sector. 

KPS Capital Partners is private equity's next up-and-coming firm

Founded in 1997, Michael Psaros’ leveraged buyout shop has an unconventional fee structure. The firm eschews the industry tradition of “2 & 20,” meaning that they claim a management fee of 2% and 20% of profits, and instead employed a “1 & 30” on its most recent special situations fund. The firm consistently attracts more cash than it is seeking to raise, as well. The most recent fund raised $3.5 billion, exceeding what Psaros had initially sought. Now, KPS manages about $6 billion. The private equity firm has the performance to back it up; it’s never had a losing fund. New Jersey State pension documents detail how well prior funds have performed. 

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The three most important letters in the private equity industry are no longer "LBO."

Now what really matters is "AUM," or assets under management.

Thanks to big banks being regulated out of businesses like hedge fund investing, private equity investors like Henry Kravis and Steve Schwarzman have been presented with a golden opportunity to diversify away from LBOs, or leveraged buyouts, and grow their assets.

KKR's deal to back hedge fund Marshall Wace is the latest example of how the leveraged-buyout business is transforming into multistrategy money management.

Kravis' investment firm is taking a 24.9% stake in the London fund, which manages $22 billion in assets under management. KKR could grow its ownership interest over time to 39.9%.

The firm isn't exactly coy about why it's doing this: "Hedge fund assets, now at $3 trillion globally, are the largest part of the alternative asset management industry," it said in a statement Wednesday announcing the partnership with the hedge fund.

KKR is one of a number of investment firms whose private equity deals came back to bite its founders. Its most recent flagship fundraising took in less than $10 billion — barely more than half what its precrisis funds took from eager investors a few years ago.

Now up-and-coming LBO shops are offering better terms and better performance to investors and luring more cash away from the biggest managers.

Plenty of other private equity firms have bought into the hedge fund business this year. Activist investor Jana Partners sold a minority stake in itself to a private equity investor in March.

And Blackstone backed hedge fund Magnetar Capital, a $13.6 billion investor, earlier this year. That wasn't the only one for Schwarzman this year. Blackstone seeded, and later invested more into, another hedge fund: Senator Investment Group, which runs around $7 billion in assets.

Already, thanks to Schwarzman's massive push into residential property, private equity isn't even the leading moneymaking line of business at Blackstone. That honor now goes to the firm's real-estate division, which routinely raises funds as big as its flagship private equity vehicles.

Private equity investor Apollo Global Management counts a handful of hedge funds among more than 100 subsidiaries in its annual filing, but doesn't break out performance figures.

Some hedge fund bets have gone belly up. Carlyle Group, which has enjoyed solid performance in its private equity funds in part thanks to its strategy of taking on smaller transactions than some of its competitors, has also operated hedge funds that underperformed and caused some reputational damage to the firm.

But it is AUM that is really the name of the game. Despite outpacing competitors' stock performance in the years since the financial crisis, Schwarzman is openly lamenting what he feels is an undervaluation of Blackstone's stock. In the time Blackstone's stock outperformed all other listed competitors, the firm also grew its AUM more than any others — in part through hedge fund investing, which represents $68 billion of the firm's activity.

As long as regulators keep giving so-called private equity investors room to go where investment banks and insurers can't, Wall Street should anticipate that more hedge funds will be bought out, or bought into, by CEOs like Kravis and Schwarzman.

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It's official: Samson Resources, the Oklahoma-based oil-and-gas exploration company, has gone bust.

The company filed for Chapter 11 late Wednesday.

KKR, which bought the company for $7.2 billion, is out a whole lot of money, once again, on a busted energy deal.

The private equity firm wrote the investment down completely some time ago, according to a person familiar with the matter. 

This isn't the first time KKR has been hit by a bad investment in the energy sector.

Electric utility company Energy Future Holdings Corp. filed for bankruptcy in April 2014.

Other private equity firms to take a hit recently include energy investor First Reserve, which took a loss when its investment in Sabine Oil and Gas went south amid plunging commodity prices in July.

"Given the industry downturn and impact of the volatile commodity environment, this is the right next step for Samson," a spokeswoman for KKR said. "KKR is grateful for the hard work and dedication of management and the many employees at Samson."

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Private equity firms could be close to an IPO spree as they look to exit some monster investments in the fourth quarter.

From payments processor First Data to broadcaster Univision, companies could raise billions in the coming months. Some of these are assets held onto – and marked down – in the wake of the financial crisis.

Now with high market valuations behind them, the investment firms are looking to finally book some profits. 

Of course, it's not entirely up to the sellers. The best laid IPO plans could be derailed by market volatility as investors wrestle with Federal Reserve policy and global economic concerns.

The funds could also have another trick up their sleeves: IPO filings are sometimes followed by outright sales of companies instead of a trading debut. One IPO on the docket for this year has already used this so-called dual-track tactic once, winding up sold to a high bidder instead of in public hands.

But the PE firms have recent success to point to as they push for exits. Several big deals in the past two years, like that of Blackstone Group's investment in Hilton Hotel, have been followed by rising shares (and on-paper valuations) of the investments. 

Here are some of the biggest IPOs expected to be come down the pipeline later this year: 

First Data is finally ready for its big public offering.

Payment processor First Data is being readied for its return to public markets more than eight years after private equity firm KKR spent $26 billion to acquire it. 

The Wall Street Journal reported last week that the $3 billion offering being made by First Data suggests a lower valuation than the one at which the private equity firm had acquired it. KKR also won’t be making any money off the IPO, at least, initially: First Data will use the $3 billion in anticipated proceeds, according to the Journal, to pay down a whopping $21 billion debt bill.

Albertsons is paying down debt and fees with its big offering.

Also expected to make its market debut soon is Albertsons, the super market chain backed by private equity firm Cerberus.

This January, the company completed a mega-merger with grocer Safeway, which expanded the company's footprint to more than 2,200 stores in 34 US states. The company filed an amended prospectus last week that revealed it would sell nearly $2 billion in stock. Like First Data's deal, much of those proceeds would go toward paying off existing debt, as well as management fees. 

Neiman Marcus filed for a 2015 IPO, but we've heard that story before.

Neiman Marcus is ready for an IPO (again). Bought by private equity before the financial crisis in 2005, its former owners TPG Capital and Warbug Pincus sold it to a pair of new private investors in 2013 (this, after teasing the market with an IPO filing).

Ares Capital and the Canada Public Pension Investment Board spent $5.1 billion to buy the retailer and now, the new owners are lining it up for an IPO. 

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(Reuters) - KKR & Co LP , the private equity firm founded and headed by Henry Kravis and George Roberts, said on Monday it had appointed Joseph Bae and Scott Nuttall as co-presidents and co-chief operating officers, setting them up as its future leaders.

The move represents the biggest shakeup in the 41-year-old firm's history since KKR's other co-founder, Jerome Kohlberg Jr, left it in 1987. It positions Bae and Nuttall to take over from Kravis and Roberts when the 73-year-olds decide to step down.

"Having joined the firm together over 20 years ago, Joe and Scott have a strong foundation of trust, professional respect and personal friendship that is critical for success," Kravis and Roberts, who will continue to serve as co-chairmen and co-chief executives, said in a statement.

Unlike publicly listed peers such as Blackstone Group LP , Carlyle Group LP and Apollo Global Management LLC , KKR has never before named a president or someone with an equivalent title, a job that could serve as a stepping stone to eventually leading the entire firm.

This was partly because of Kravis' and Roberts' concerns about alienating other members of their senior leadership team, sources inside the New York-based firm, who had identified Bae and Nuttall as frontrunners in the succession race, told Reuters in 2014.

Those concerns were proven right on Monday as Alexander Navab, KKR's private equity chief in the Americas who was also hoping to succeed Kravis and Roberts, disclosed he would leave the firm following "an orderly transition." 

KKR's chief administrative officer Todd Fisher, another possible successor, also announced on Monday his intention to depart from KKR at the end of the year to pursue a career not related to investments. KKR said Fisher's decision was unrelated to KKR's move to appoint co-presidents.

Bae, 45, was previously managing partner of KKR Asia and the global head of KKR's infrastructure and energy businesses. In his new role, he will focus on KKR’s global private equity businesses as well as its energy, infrastructure and real estate business, the firm said. 

Nuttall, 44, served previously as head of KKR's global capital and asset management group. In his new role, he will concentrate on KKR's corporate and real estate credit, capital markets, hedge fund and capital raising businesses, together with KKR's corporate development, balance sheet and strategic growth initiatives, according to the firm.

Both Bae and Nuttall joined KKR in 1996. Nuttall had previously spent less than two years at Blackstone, while Bae had a similarly short stint at Goldman Sachs Group Inc's principal investments group.

Nuttall rose to become head of KKR's financial services investment team and also became involved early on with the firm's diversification into debt investments, which started in 2004. He also played a key role in taking KKR public, a process that involved merging the firm with an Amsterdam-listed fund in 2009 and then moving the listing to New York in 2010.

Bae was sent to Hong Kong in 2005 at the age of 33 to kick-start the firm's business in Asia, a diverse and fast-growing region whose capital markets are, for the most part, less developed, and in which several private equity firms accustomed to Western-style leveraged buyouts have struggled.

The Korean-American dealmaker's team launched its first Asian private equity fund in 2007, raising $4 billion from investors. Its success led to KKR raising a successor fund that amassed $6 billion, making it the largest private equity fund dedicated to Asia.

KKR last month announced it had completed raising a third private equity fund for Asia, amassing $9.3 billion.

DAY-TO-DAY OPERATIONS

Bae and Nuttall will now be jointly responsible for the day-to-day operations of KKR, as Kravis and Roberts, who each have a net worth of $5.1 billion according to Forbes, focus more on cultivating relationships with investors and mentoring young talent.

Kravis and Roberts, who are cousins, pioneered leveraged buyouts through the eponymous firm they created in 1976 alongside Kohlberg, with an initial investment of $120,000.

By attracting money from some of the world's largest institutional investors such as pension plans and sovereign wealth funds, the firm grew from a single $30 million fund in 1978 to around $140 billion in assets under management currently, spanning private equity, credit and real estate.

KKR gained widespread recognition early on through its $25 billion leveraged buyout of tobacco and food conglomerate RJR Nabisco in 1988, a battle that was immortalized in the bestseller 'Barbarians at the Gate.'

With a market capitalization of $15.7 billion, KKR has seen its shares soar 53 percent in the last 12 months, as the wider market rally buoyed the value of its assets.

Still, the stock is seen by many investors as undervalued compared to big asset managers such as BlackRock Inc . Activist hedge fund ValueAct Capital Management LP unveiled a 4.9 percent stake in KKR in April, arguing KKR's shares have the potential to reach $37.

Shares closed trading on Friday at $19.25.

(Reporting by Greg Roumeliotis in New York; Editing by Bernadette Baum)

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Remember back in March during the very depths of the crisis, there was a story about PE boss Henry Kravis spending $28 million on a single antique chair?

Well, it wasn't true. Kravis never paid that much for any chair, but up until now we never knew who bought it. Alas, ChairGate has been solved.

Well, you can stop sleuthing. The winner of the chair was Greek shipping magnate Dinos Martinos, according to Bloomberg.

At first blush, it seems weird that anyone, no matter how rich, would spend $28 million on a single chair while the whole world seemed to be going to hell in a handbasket. But then, what could be more logical than dumping cash in exchange for hard, usable assets? Like chairs.

(Via Marion Maneker)

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ING has cut 5% of its U.S headcountin preparation for an IPO. The company began laying off 400 people yesterday.

Blackstone's senior managing director thinks thatWarren Buffett criticizes leveraged buyout firms because it furthers his own agenda as their rival.

The number of corporate insiders selling their shares overtook the number of them buying by the largest margin since March '06.Microsoft's Steve Ballmer, for example, offloaded $1.3 billion in shares.

Set your DVRs! Billionaire Henry Kravis is going to be profiled tonight on Bloomberg's Game Changers series. Richard Beattie, John Mack and Ace Greenberg are interviewed for the episode. 

Goldman Sachs might REALLY be pulling $120 million out of Phil Falcone's embattled hedge fund because Harbinger stole a Goldman star trader last year, Omar Asali.

Non-Wall Street Bonus

Supermodels were in abundance in New York last night for the Victoria's Secret fashion show. Katy Perry and Akon performed.

Rumors are circulating that Prince William is very close to proposing to long-term girlfriend Kate Middleton

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Wall Street CEO's and hedge fund managers are loaded.

One of the ways they stay that way is with charity tax write offs. Most of Wall Street's donations are pretty run-of-the-mill. Fighting poverty. Ending hunger. Aiding education.

But some of them invest a large chunk of their time and money to causes they really care about.

You can tell the difference because the causes they donate to are random and specific, like spiritual awareness or golf - you'd have to be a big fan of the cause to donate. 

So we've deduced what some of Wall Street's richest REALLY care about, based on their quirky charity donations.

Ackman cares about Jewish genealogy

Bill Ackman helped set up the Ackman & Ziff Family Genealogy Institute and contributes to the Center. The Ackman and Ziff families donated $1 million.

"We want our children to know, not only their living relatives, but those representing past generations for a greater connection to their family and ancestral origin and heritage," the Ackman family said in a press release.

Ackman also cares about Newark, NJ kids.

In 2007 when three students from Delaware State University were murdered in a playground behind Mount Vernon Elementary School in Newark, Ackman put forth $1 million which Newark mayor Cory Booker used to beef police security equipment. Ackman had previously contributed to Booker's campaigns.

Blankfein cares about Harvard

The Lloyd and Laura Blankfein Foundation donated $620,000 to Harvard Law School.

They also donated $500,000 to their sons' school, Ethical Culture Fieldston School and $50,000 to Barnard College, Laura Blankfein’s alma mater.

They made smaller donations of $1,000 to Dorot, a New York nonprofit that cares for the elderly, the Animal Rescue Fund of the Hamptons, and New York Cares.

Source: Bloomberg

Cohen cares about modern art

Art can be considered a donation to the greater good of society, too, in a way.

Since 2000, Steve Cohen has collected everything from Jasper John's "Flag", to Willem de Kooning’s "Woman III", Andy Warhol's "Turquoise Marilyn" and Damien Hirst's "The Physical Impossibility of Death in the Mind of Someone Living". It has been widely reported that he plans to set up a private museum in Connecticut where he lives.

In 2009, 20 of his paintings and sculptures were curated by Sotheby's for a two week exhibit. By doing so, Cohen let the world share in the enjoyment of gazing their eyes on his amazing collection.

There is sad news about a Wall Street legend.

Ted Forstmann, a private equity legend, has brain cancer and is "gravely ill," according to the WSJ.

Charlie Gasparino says:

Forstmann recently underwent brain surgery to remove a malignant tumor, though he is recovering, and according to people close to him, he has returned to work managing his private equity firm, Forstmann Little & Co.

His firm, Forstmann Little, has taken over hugely successful companies including IMG, Gulfstream Aerospace, Topps Playing Cards, Dr Pepper, and General Instrument.

You might know him from his starring role in Barbarians at the Gate, the book (and movie) about KKR's Henry Kravis' takeover of RJR Nabisco, which is still the largest acquisition in history.

Click here to see the biggest private equity buyouts in history >

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The brain behind Capital IQ, the financial database service that was sold to McGraw Hill in 2004 for over $200 million, has a new product for Wall Street, Deal Book reports.

Capital IQ co-founder Neal Goldman has created a new company called Relationship Science that acts like a 6 degrees of separation for Wall Street's elite. It costs $3,000 a year to get a subscription, and some major investors are loving the idea.

From Dealbook:

Here’s how it works: Let’s say a banker wants to get in touch with Mr. Kravis, the private equity deal maker, but doesn’t know him personally. The banker can type Mr. Kravis’s name into a Relationship Science search bar, and the system will scan personal contacts for people the banker knows who also know Mr. Kravis, or perhaps secondary or tertiary connections...

Kenneth Langone, a financier and co-founder in Home Depot, said that when he saw a demonstration of the system he nearly fell off his chair. He used an unprintable four-letter word.

“My life is all about networking,” said Mr. Langone, who was so enthusiastic he became an investor and recently joined the board of Relationship Science. “How many times do I say, ‘How do I get to this guy?’ It is scary how much it helps.”

Henry R. Kravis, Ronald O. Perelman, Joseph R. Perella, Stanley F. Druckenmiller and Andrew Tisch have joined Langone in supporting the project financially.

It is, after all, about who you know.

Read the full piece at Dealbook>

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Much of the talk in the hedge fund space lately has been about the American Federation of Teachers "watch list" of hedge funds that was released last week. 

The AFT's report "Ranking Asset Managers" was sent to pension trustees and listed a bunch of money managers who support education reform organizations.

The reaction from hedge fund sources consulted by Business Insider was that the list was "thuggish" because it aims to scare away potential investors or get current investors to divest.  Others viewed their inclusion as a "badge of honor." 

It appears private equity giant KKR has figured out how to get off the blacklist, though.  

The AFT named KKR on it's so-called "watch list" because "a foundation connected to co-founder Henry R. Kravis previously contributed to the Manhattan Institute." 

It's a pretty loose connection.

KKR sent the AFT a letter making it clear that they actually support defined benefit plans. 

Here's an excerpt from the letter:

It worked.  

The AFT's president Randi Weingarten took KKR off the list.  Here's an excerpt: 

So if you want off the list, here's a strategy for you.

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Former CIA Director and retired U.S. Army General David Petraeus has joined private equity giant KKR, the firm said in a release. 

Petraeus, who resigned from the top post at the CIA over an extramarital affair last year, is now the chairman of the newly created KKR Global Institute. 

Here's the release: 

Kohlberg Kravis Roberts & Co. L.P. today announced the appointment of retired four-star General and former Director of the CIA David Petraeus as Chairman of the newly created KKR Global Institute.

Henry Kravis, Co-Founder and Co-CEO of KKR, stated: "I have long known and respected General Petraeus and, on behalf of everyone at KKR, I welcome him to the firm. As the world changes and we expand how and where we invest, we are always looking to sharpen the ‘KKR edge.' With the addition of General Petraeus, we are building on the work we have done to understand the investment implications of public policy, macro-economic, regulatory and technology trends globally. We are pleased to bring all of this expertise together under one umbrella, the KKR Global Institute, to deliver the best of KKR's insights for our investors."

Over the past several years, macro-economic and geopolitical considerations, including the heightened role of central banks following the financial crisis, new regulation and major changes in public policy, have led to KKR's increased engagement on these areas and on environmental, social and governance issues. At the same time, KKR is a global firm investing in new and emerging markets that have new risks and opportunities. The KKR Global Institute will be the nexus of KKR's focus on the investment implications of these issues. It will also further build on the firm's efforts to help KKR's portfolio companies expand globally, and it will periodically serve as an outlet for publishing the firm's thought leadership products, including views from portfolio managers and industry experts.

As Chairman of the KKR Global Institute, General Petraeus will work with a team at KKR and in tandem with Ken Mehlman, Global Head of Public Affairs, andHenry McVey, Global Head of Macro & Asset Allocation. In addition to his role as Chairman of the KKR Global Institute, General Petraeus will also support KKR's investment teams in the diligence process, especially when the Firm is considering investments in new geographies.

"KKR is one of the best investment firms in the world," General Petraeus observed. "I am very pleased to join such a great team. I have watched KKR evolve as it adapted to the post-financial crisis world and became a go-to partner for companies worldwide. I look forward to supporting the investment teams in their pursuit of the best opportunities for clients and also being a part of a new initiative to provide additional insights to KKR's clients and companies."

Ken Mehlman, a key partner in establishing the Institute, said: "For 37 years, KKR has produced strong returns for our investors by marrying deep industry knowledge with active ownership and a long-term focus. Over the last five years, KKR has established and systematized our focus on stakeholder engagement and macro-economic and geopolitical factors. These considerations are now built into our investment and portfolio management processes and with this new initiative and additional talent, we will take it to the next level."

In recent months, General Petraeus has focused his efforts on supporting returning veterans as they transition to the workforce. Among such endeavors, he currently serves on the advisory council of American Corporate Partners, an organization that connects veterans to business leaders. In addition, he will lead a seminar as a visiting professor at the City University of New York's Macaulay Honors College and he is a member of the University of Southern California faculty. As a Judge Wid ney Professor at the University of Southern California, he will lecture part time and also mentor members of the school's Reserve Officers Training Corps program and young veterans.

General Petraeus holds a PhD in international relations from Princeton University and has taught economics and international relations at the United States Military Academy at West Point. He also completed a fellowship at Georgetown University's Institute for the Study of Diplomacy.

About General David H. Petraeus

David Howell Petraeus is a retired American military officer and former government official. In June 2011, the U.S. Senate unanimously confirmed him as director of the CIA, a role he held from September 2011 until November 2012. Prior to assuming the directorship of the CIA, he was a highly decorated four-star general, serving more than 37 years in the U.S. Army before retiring in August 2011.

A lauded combat leader and strategist, General Petraeus was instrumental in reshaping American military doctrine through his focus on the concepts of a comprehensive civil-military counterinsurgency campaign.

General Petraeus' final assignment in the military was as commander of the NATO International Security Assistance Force and U.S. forces in Afghanistan. Other four-star assignments included his service as the 10th commander of the U.S. Central Command, where he was responsible for military operations in Afghanistan, Pakistan, Central Asia, the Arabian Peninsula, Iraq, the Levant and Egypt, and his service as commanding general of the Multi-National Force—Iraq for more than 19 months.

In the latter position, he commanded all coalition forces in Iraq throughout the surge in 2007 and 2008 when violence in that country was reduced by nearly 90 percent. During that tour in Iraq, he oversaw the implementation of the concepts in the Army/Marine Corps counterinsurgency manual that was drafted under his direction during his assignment as commander of the U.S. Army Combined Arms Center at Fort Leavenworth, Kansas, between his second and third tours in Iraq.

Previously, General Petraeus was the first commander of the Multi-National Security Transition Command-Iraq and the NATO Training Mission—Iraq. Prior to those assignments, he was commanding general of the U.S. Army's 101st Airborne Division (Air Assault), leading the 101st into Iraq in 2003 during the fight to Baghdad and the first year in Iraq, when his division distinguished itself in the conduct of a comprehensive counterinsurgency campaign.

Following General Petraeus' extensive service in the Middle East, former U.S. Secretary of Defense Robert Gates praised him for the critical and historic role he played in dramatically reducing the violence in Iraq and haling the Taliban's momentum in Afghanistan, writing that he had "changed the course of two wars, an unprecedented accomplishment." Earlier in General Petraeus' career, he also served in Europe, Bosnia, Central America, Haiti, Kuwait and the United States.

General Petraeus earned a bachelor's degree from the United States Military Academy, from which he graduated in 1974 as a distinguished cadet, finishing in the top 5 percent of his class. He later received the General George C. Marshall Award as the top graduate of the U.S. Army Command and General Staff College class of 1983. He subsequently earned an MPA and a PhD in international relations from the Woodrow Wilson School of Public and International Affairs at Princeton University. He served as assistant professor of international relations at the U.S. Military Academy and also completed a fellowship at Georgetown University's Institute for the Study of Diplomacy.

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If you were watching the Super Bowl, then you might've noticed this legendary image.

It's of Henry Kravis sitting next to Michael Douglas.

Most people know Michael Douglas for his role as Gordon Gekko, the greedy villain of the iconic film "Wall Street" and the sequel "Wall Street: Money Never Sleeps."

Kravis, on the other hand is a bit more obscure.  He's one of the K's in the legendary private equity firm KKR, or Kohlberg Kravis & Roberts.

Kravis and KKR are behind some of the biggest private equity deals in history. They are also famous for their controversial leveraged buyout of RJR Nabisco, a deal so controversial that it became the subject of the book and movie "Barbarians At The Gate."

Is greed good? That may be up for debate. Greed, however, does get you great seats at the Super Bowl.

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It's only Monday afternoon, and it's already been a long week for private equity firm KKR. 

The day started with the bad news that US Foods' $3.5 billion deal to sell to food distributor Sysco was squashed.

KKR and another private equity firm had owned the company since 2007 and were expecting to complete their deal since 2013. 

Later Monday morning the Securities and Exchange Commission announced that KKR would spend nearly $30 million to settle charges that the private equity firm inappropriately pushed expenses to limited partners that the firm itself should have paid.  

But that's not the only headache for Henry Kravis. The private equity firm that bears his name was once the most feared LBO firm on Wall Street, especially in the "Barbarians at the Gate" days that had buyout barons like Kravis doing hostile deals left-and-right.

Here are a few of the struggles his firm has faced in recent years. 

• KKR's biggest LBO went bust and it was a huge loss for the firm. The 2006 fund that KKR used to dive into mega-deals like the since-bankrupt TXU has underperformed other investments the private equity firm has made. 
• KKR's biggest competitors are surpassing it in the most important metric on Wall Street. For years, Blackstone has been the biggest PE firm on Wall Street by assets under management (AUM). But Steve Schwarzman's investment firm has done something more important for his investors than just growing through its expanding real estate portfolio. Unlike KKR, Blackstone is successfully exiting the biggest investment it has ever made. Over the last five years, Blackstone's stock has appreciated at a rate more than double that of KKR. 
• KKR still hasn't gotten out of some very big buyouts. This includes First Data, a tech company KKR invested in at the height of the last buyout boom. The private equity firm re-invested in the company a year ago. This signals KKR isn't going to get out of that investment any time soon. 
• KKR's prior funds did much better than recent ones. The KKR fund that invested in TXU has a value multiple lower than most of the private equity firm's other flagship funds, according to pension data. 
• The private equity firm has offered some of its biggest investors very deep discounts to keep their business. However, this has been the case across much of the private equity industry. Investors are rebelling against long-held standards of "2 & 20." That represents the 2% management fees private equity firms charge and the 20% of profits to which they're typically entitled. But that's no longer an industry standard, especially for PE firms that have disappointed. 

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Legendary private equity chief Henry Kravis said it was "scary" when Donald Trump floated his name as a possible Treasury Secretary if he were to be elected president. 

"That was scary when he said that," Kravis said at Fortune's Brainstorm Tech conference in Aspen on Monday, according to Bloomberg News.

Kravis, 71, and the firm he co-founded, KKR, were immortalized in the bestselling-book "Barbarians at the Gate," which chronicled the historic leveraged buyout of tobacco/food company RJR Nabisco. 

Shortly after Trump launched his campaign, he appeared on MSNBC's "Morning Joe." On the show, the billionaire real-estate magnate said that he knows "the smartest guys on Wall Street" and the "best negotiators." 

"I know the overrated guys, the underrated guys, the guys that nobody ever heard of who are killers who are great. We've got to use those people," Trump said.

When asked who he would pick for Treasury Secretary, Trump responded: "I'd like guys like Jack Welch. I like guys like Henry Kravis. I'd love to bring my friend Carl Icahn, you know, I mean, we have people that are great...we don't use them, Joe. We use people who are soft, and weak, and frankly, stupid and incompetent."

Icahn already declined Trump's proposal. The famed billionaire investor wrote on his blog that he does "not get up early enough in the morning to accept this opportunity."

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In July, three companies that were targets of some of the largest ever leveraged buyouts — Univision, the Spanish-language broadcaster; technology company First Data; and supermarket Albertsons — filed to go public. 

The companies are also notable because they've been owned by private-equity funds for much longer than anticipated — as much as a decade in Albertsons' case.

An IPO filing is still a long way away from a clean exit: Even with a public listing it can take years for private-equity investors to sell down their shares and be done with an investment. 

In the wake of the financial crisis, so-called "hold times" at private-equity firms increased to an average of five to nine years for a North American company compared to an average time of 4.2 years before markets crashed, data from Preqin shows.

Hold times are the duration a private-equity-backed company sits in its owner's portfolio. Hold times have also irked some private-equity investors like state pensions after revelations of fee abuse at some of the industry's top firms. 

"I hate long hold times in private equity, personally," Don Vollum, managing partner at Vista Ridge Capital Partners, a private-equity investor based in Oregon, told Business Insider.

"That’s not to say that I want to see managers rush a company to market before it’s ready, but rather that the point of 'private equity' is to transform a company in a relatively short, fixed amount of time — three to five years, typically."

For private-equity firms, that's meant having to run businesses for much longer than they planned. In some cases, they've used the time to sell off pieces to manage a smaller business as they push toward an IPO. 

In other cases, big private-equity firms like TPG Capital and KKR found themselves facing problems they couldn’t strategize past. Deals like Harrah’s Entertainment and Energy Future Holdings went belly-up, costing sponsors billions in the process and making it harder for them to raise new funds in the aftermath.

Business Insider took a look at five deals that represent about $100 billion in invested capital to see how private equity is working through some of the transactions that proved most difficult in the wake of the financial crisis. 

In Equity Office, Blackstone trusts

Blackstone Group bet big on Equity Office Properties in 2007 and was fortunate to quickly flip a large chunk of the real estate after acquiring it for $36 billion. Blackstone has continued to pare down the assets in a series of sales, like last year's sale of $3.5 billion of California office buildings, and has now offloaded more than half of the properties it acquired in the original deal.

It is very likely the private-equity firm will reel in a profit on its Equity Office deal, in a similar fashion to how Steve Schwarzman’s firm won with its bet on Hilton Worldwide Hotels. That is, piece by piece.

One of the things that has made Hilton a successful deal is that the sponsor has sold stakes of around 10% in the company into what has been a rising market for its stock. Hilton also exited properties held within its own portfolio at a high valuation.

First Data was not Kravis' first post-crisis headache

KKR has had a tough time with some of its biggest deals, but Henry Kravis’ PE firm is on the verge of making a big exit more than seven years after acquiring First Data. It took a lot of extra homework and the attentive eye of Kravis himself to get there.

First Data's IPO filing shows that it hasn't recorded an annual profit since at least 2010 — as far back as the financial statements go. 

Seven years after the initial $27 billion buyout, KKR had to invest more than $1 billion to prop up First Data. The IPO will be a big test for KKR. After another of its mega-buyouts (Energy Future) filed for bankruptcy, it remains to be seen if Kravis’ PE firm will ever again do a deal north of the $10 billion mark again. 

Doubling down on the consumer could pay off at Albertsons

Rather than cutting down, like Blackstone has done with Equity Office, the owners of supermarket giant Albertsons have gone the other way — scaling up the business with acquisitions. 

The initial $9.6 billion buyout of Albertsons by Cerberus Capital Management dates back to 2005. It was followed by a handful of deals, most notably a $9.4 billion bid for Safeway that closed in January of this year. By July, the merged company had filed for an IPO. But it hasn’t yet disclosed a share price (crucial in determining valuation). Cerberus controls a majority stake leading up to the IPO. 

Jerome Kohlberg was a gentleman in an age of 'Barbarians at the Gate.'

The founder of private equity firm Kohlberg Kravis Roberts & Co died on Thursday at his home in Martha's Vineyard, Massachusetts.

The death of the man who founded private equity giant KKR should serve as an opportunity for reflection at how much the business has changed in the fifty or so years since he pioneered the private equity investment model.

Kohlberg's mentality as a private equity investor was based in the tried-and-true operational improvement strategy. He wasn't a fan of financial engineering and he shunned mega-deals.

He put rates of return for his investors ahead of the size of his firm. 

"Jerry was a real visionary, having played an important role in developing the private equity model in the 1960's, and he was a true mentor to George Roberts and me," KKR co-founder Henry Kravis said in a statement provided to Business Insider. "Subsequently, he became an important factor in launching KKR, the first private equity firm, with George and me."

The firm was relatively insignificant when it first started out. KKR's first fund was $31 million, a paltry sum by today's standards. The returns however were incredible in the early years. KKR returned 22.5% on its 1980 fund, and nearly 40% on its 1982 fund. 

In 1987 Kohlberg left KKR in an surprising departure, telling his colleagues "We must all insist on ethical behavior or we will kill the golden goose." 

He went on to found private equity firm Kohlberg & Co., which didn't raise a fund in excess of $2 billion in 20 years of existence. 

At KKR, meanwhile, the fund bearing his name would successfully pursue what was at the time the biggest buyout in the history of the private equity industry.

The back-and-forth tale of the buyout of RJR Nabisco was chronicled in Wall Street tome 'Barbarians at the Gate' which earned the industry a nickname and reputation in finance that stuck with it for years. 

Under Kravis, who Kohlberg supervised in the 1970s at Bear Stearns, KKR went on to pursue enormous LBOs.

KKR has grown to manage a total of more than $50 billion today. Some deals, like an investment in energy firm TXU, have failed spectacularly. KKR's internal rate of return, judging by returns reported by Oregon's pension fund, have not matched the success the firm had in the years prior to Kohlberg's departure. 

The private equity giants of today are almost unrecognizable from the firm Kohlberg founded.

They have diversified from buyouts into the likes of real estate, loans and hedge fund trading. They have amassed billions in assets too. KKR rival Carlyle has more than $60 billion in dry powder to spend, for example.

The industry is expected to try and grow that cash pile by extending its efforts to attract money from retail investors and 401(k) portfolio managers. The fact that private equity has beaten returns on the S&P 500 with consistency is likely to add to its appeal. 

Those efforts are built at least on part on the work and reputation of Jerome Kohlberg. 

The industry's next generation of investors will be keenly aware if the 'barbarians' of today fail to match the standards set by the grandfather of the PE business -- namely that fund performance is the key point.

The example Jerome Kohlberg set running Wall Street's first private equity firm is a very hard act to follow, even for Henry Kravis.

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