The firm typically makes investments in middle market companies with enterprise values between $100 million and $500 million and seeks to provide equity capital of $50 million to $125 million. The firm's investment philosophy is that it can generate attractive rates of return for its investors by improving the operating performance of its portfolio companies rather than relying on financial engineering. Consequently, the firm has generally used a lower degree of financial leverage than that employed by many other buyout firms, with a median debt-to-equity ratio of 3-to-1, including a number of transactions with 1-to-1 debt-to-equity ratios.

The firm devotes careful attention to due diligence, transaction execution, and investment monitoring. Primary responsibility for each potential investment is assigned to a transaction team led by a partner. This team works closely with management to understand the company’s business and markets. They also perform extensive business, legal and accounting due diligence, culminating with the preparation of a detailed five-year business plan. The management of each portfolio company is responsible for achieving the performance targets set forth in this plan. Although the firm establishes a close working relationship with each portfolio company, Kohlberg’s professionals are careful to respect the division of responsibilities between investors and operating management. The firm’s professionals provide ongoing support in the areas of corporate finance, acquisitions and long-term strategic planning.

Kohlberg & Company believes that a buyout investment can best succeed if the interests of management and investors are aligned. The partner of Kohlberg & Company make a substantial personal investment in each transaction. Each company’s senior managers are also expected to make a direct investment in amounts which, while not necessarily large in dollar terms, are meaningful for them. Managers also receive incentive compensation and additional equity interests (generally in the form of stock options), which allow them to share in the success of the Company as it achieves its annual and long-term goals.