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Breaking Down The Most Successful Private Equity Firms Of All Time

Private Equity Firms

What makes a Private Equity firm “successful”? Some people may rank firms based on fund performance while others choose to look at assets under management. Others may choose to rank them based on the quality of portfolio companies, offices around the world, number of employees, or influence on the global economy. While many rankings exist, there are a few undisputed private equity firms that have been extremely successful in terms of many of the qualities above and have stood the test of time through multiple economic cycles.

These firms all have a few qualities in common, including, but not limited to, a clear investment strategy, strong track records, experienced and knowledgeable professionals, ability to add value to companies beyond contributing capital, disciplined investing approaches, and patience to take a long-term view on investments. The firms below are just a selection of the largest and most successful firms overall, but based on your individual investment strategy or criteria, there may be others out there better suited to learn lessons from. Let’s break down some of these “most successful” firms and the secrets behind their success.

The Blackstone Group

Blackstone is one of the largest PE firms in the world. Founded by Stephen Schwarzman in 1985, the key to Blackstone’s success is that the firm has developed a system to make little to no mistakes in the investment process and does it much better than other firms out there. How? Schwarzman claims that the idea of losing money is so painful and that the concept of going back to his humble upbringing is enough to motivate him to propel his team to always do their best work. Also, he learned from early mistakes and made sure never to repeat them. For example, in the early days, one customer lost $32 million, and the team never wanted something like that to happen again. They put in place a rigid investment process that still stands to this day to avoid major losses for customers and the firm. Overall, investment professionals at Blackstone have perfected the art of quick decision-making and sharing ideas across the table, a culture that has been passed down from the top to the most junior analysts.


KKR was founded by three legends who all worked together at Bear Stearns: Jerome Kohlberg, Henry Kravis, and George R. Roberts. Founded in 1976, KKR is one of the oldest and largest PE firms in the world and has completed several major leveraged buyouts, such as RJR Nabisco in 1989 and TXU in 2007, which were the largest buyout deals at those times. The secret to KKR’s success seems to be in the firm’s ability to bet on management teams with high growth potential. Investment professionals at KKR hold themselves to high standards to conduct extensive research on companies before diving in and emphasize spending time with the team. They are looking for people to work with, both personally and professionally, for the long-term and want to get to know them on a deeper level than just as colleagues. In developing a business plan, the team at KKR is careful to set achievable targets and work alongside the management team to make the investment meaningful and successful.

Apollo Global Management

Apollo was founded in 1990 after the collapse of Drexel Burnham Lambert, an investment bank that was involved in illegal activities in the junk bond market. One of Apollo’s secrets to success, as stated by founding partner Marc Rowan, is to buy businesses at a low price and stick to the fundamentals. He particularly emphasized how while all investors know that a low price will bring you the highest returns, the most capital is invested when prices are high. He attributes this phenomenon to the fact that when markets are doing well, people get excited, businesses want to be sold, and more deals are done. If we in fact wait to do deals when the market is down, that will benefit us in the longer term. Apollo relies on this distressed strategy since many of its founders came out of the debt business. The firm has used its fixed income skill set to create a competitive advantage in the already saturated PE space.

The Carlyle Group

Carlyle was founded in 1987 as an investment banking boutique by five partners who worked in finance and government. The fund slowly migrated over to raising capital deal-by-deal for leveraged buyouts. While the firm had a strong start, it suffered a period of poor returns after its IPO in 2012 because it focused on generating fees on investment performance rather than management fees. This led to some less than desirable performing investments and significant losses. How did they recover? The co-CEOs stepped down and appointed successors who turned the firm around by focusing on predictable fees related to the management of assets rather than looking for fees to be gained on outperforming investments. By turning towards a “safer” investment strategy and looking for business with more “sticky” revenue sources, Carlyle has risen from the ashes and many investment professionals believe the firm’s trajectory is only going upward.

Thoma Bravo

Founded in 1980, Thoma Bravo is known for acquiring software companies. In 2021, it was named the highest growing major buyout firm in the world and oversees a portfolio of over 40 companies. The founders credit the firm’s success to a “consolidation” or “buy and build” strategy, and investors have been shocked at the firm’s progression in such a short period of time. Unlike its peers described above, Thoma Bravo has had less of a steady climb up to the top and rather more of an accelerated upward trajectory over the last several years. The firm claims they maintain the same investing strategy as when they were smaller and less well-known and are just writing bigger checks for quality businesses. They take somewhat of an opposite approach to Apollo because they don’t wait for the market to get cheap to act. If the market is overvalued, they believe sitting around won’t make you any money; the firm instead remains optimistic when closing deals at high valuations because they make bets on businesses that will thrive in these types of situations.

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