Kohlberg seeks to enhance operational performance by implementing operating and strategic changes to improve efficiency, increase revenue and cash flow and create incremental equity value. The Firm begins this process during due diligence, driving an exhaustive effort to identify and quantify opportunities for operational improvement, revenue enhancement and business repositioning. Kohlberg’s diligence culminates in a strategic plan for the company to be implemented under the firm’s ownership tenure. A core tenet of Kohlberg’s success in revitalizing profit and growth in businesses is the consistency of execution of optimization strategies across its target industry sectors. Kohlberg leverages its long history and successful franchise to bring the necessary resources to implement its investment strategy marked by three phases.

Enhancement of Management Capabilities

The management team assembled will be responsible for implementation of the strategy. This begins with the involvement of the Operating Partner at the onset of due diligence and extends through a role in the ongoing investment, typically through a Chairman of the Board position. The Kohlberg Operating Partner brings operating execution and strategy perspective developed over many years of running related businesses and working through similar situations. In this way, Kohlberg’s Operating Partners serve as a valuable mentoring resource to management.

Implementation of Operational Improvement Plan

Upon completion of the investment, the first phase of a new strategic plan is implemented. Typically, this phase focuses on excess cost reduction, implementing of best practices techniques to increase centralization of processes and improve efficiency. In Kohlberg’s Industrial Manufacturing and Consumer investments, this cost reduction phase is regularly accompanied by substantial cash flow improvements from working capital reduction. Additional liquidity is also regularly achieved in this phase through divesting non-core assets, which can be a driver of attractive deleveraging, business simplification and further cost improvement.

Targeted Growth and Business Repositioning

The last phase of Kohlberg’s ownership is a renewed focus on sales growth. In each new investment, a growth plan is implemented, frequently calling for savings generated through cost reduction to be reinvested back into the businesses in the form of product development, new market expansion or capacity improvement. In addition, in over half of its investments, Kohlberg will pursue and complete add-on acquisitions that afford an opportunity to complement existing products and distribution, while also creating impetus for further synergy and cost reduction.