Who

As the co-founder of Kohlberg Kravis Roberts & Co., Henry Kravis pioneered the buyout business in the '70s and has managed to remain at the top of the game for more than three decades now. His wife is economist Marie-Josée Kravis.

Backstory

The son of an oil engineer from Tulsa, Kravis didn't demonstrate much scholarly aptitude during his teenage years. After attending a tony prep school in Connecticut, he headed off to Claremont McKenna in California where he reportedly spent his freshman year "majoring in golf, beach, Las Vegas, and the racetrack at nearby Santa Anita." Kravis turned things around by his senior year: He earned a spot at Columbia Business School and eventually landed at Bear Stearns thanks to the intervention of his cousin, George Roberts, who worked at the firm. Both men found a mentor in Jerome Kohlberg, who taught them about the "bootstrap acquisition," the name for leveraged buyouts back then; four years later, the three joined together to found Kohlberg Kravis Roberts & Co., which became one of the early pioneers in the LBO business.

KKR made its name in the 1980s thanks to a handful of mega-deals. In 1986, the firm orchestrated the $8 billion buyout of Beatrice Foods; two years later, Kravis worked on his most famous deal, the $31 billion hostile takeover of RJR Nabisco, an epic battle chronicled by Bryan Burrough and John Helyar in Barbarians At The Gate. Kravis was transformed into one of the most prominent financiers in town (even if the deal never turned into a moneymaker for the firm), but the 1990s proved to be a mixed bag for the LBO giant. While several buyouts yielded significant returns (the firm's $350 million investment in Duracell, for example, turned into a $3.7 billion windfall), there were a number of notable losers, too, including Regal Cinemas, Spalding sporting goods, and the magazine publishing giant K-III Communications (later renamed Primedia). Nonetheless—and despite the fact it's no longer the only big buyout shop on the block—three decades after its founding, KKR remains the gold standard in private equity circles.

Of note

As with most private equity firms, KKR went on a tear in 2006 and early 2007, snapping up controlling stakes in half a dozen companies, including First Data ($27.7 billion) and the British retailer Alliance Boots ($20.5 billion). Amid all the market madness, it was only a matter of time before the largest deal in history—the 1989s takeover of RJR Nabisco—would be toppled, but few expected that Kravis himself would be the one to beat his own record. But that was precisely what he did in 2006 when he orchestrated the $33 billion deal to acquire HCA, the country's biggest chain of hospitals, and then upped the ante again with the $45 billion buyout of the energy company TXU in conjunction with TPG and Goldman Sachs.

KKR's frantic dealmaking came to a quick halt during the summer of 2007, when woes in the credit market not only impeded future deals, but threatened to unravel deals already negotiated. The mortgage meltdown delayed Kravis's plans to take KKR public, following the lead of rival Steve Schwarzman and Pete Peterson's successful IPO in 2007. (Although in light of Blackstone's performance, Kravis may not be too unhappy about waiting.) The credit crisis also hurt KKR Financial, an affiliated fund that invested in mortgage-related securities. In 2008, Kravis sold off Kohlberg Kravis Roberts's controlling stake in the company.

Keeping score

Kravis is worth $6.5 billion according to Forbes, making him the 49th richest man in America. He earned $370 million in 2007, according to the magazine.

On the job

Kravis operates from the 42nd floor of Sheldon Solow's 9 West 57th Street office building in an office suite decorated with mementos from his big deals. (A deposit slip, which the three partners used to open their first checking with $10,000 in 1976, hangs on the wall.) Although his name is still embossed on the door, Kohlberg is no longer a part of the firm; he retired in 1987. George Roberts, the third founding member, continues to work at KKR, although his base of operations is in Menlo Park.

With Roberts and Kravis now in their 60s, the issue of succession has been a major concern, particularly following the departure of several rising-star partners like Ned Gilhuly and Scott Stuart and with a public offering looming. These days, the contenders include Johannes Huth, who heads up KKR in Europe; Marc Lipschultz and Fred Goltz, who oversaw the TXU deal; and Scott Nuttall, who worked on the buyout of First Data. Another recent addition to the team is David Sorkin, the Simpson Thacher M&A expert who recently joined KKR as general counsel.

Grudge

Kravis and Blackstone chief Steve Schwarzman have long competed for deals, but the rivalry turned into a full-fledged feud in 2006-7 as both men seemed intent on proving themselves the reigning king of private equity. First there was the one-upmanship over various deals (Royal Philips Electronics, Freescale Semiconductor), then they competed to see how could engineer the biggest buyout (KKR's $33 billion HCA deal was followed by Blackstone's $39 billion deal for Equity Office Properties, which was then followed by KKR's $43 billion TXU).

And then things got personal. When Schwarzman threw a lavish 60th birthday party and failed to extend an invite to his crosstown rival, Kravis—no stranger to excessive spending himself—called the Blackstone chief "the poster boy for greed" and later blamed his big spending on the decision by Washington lawmakers to look into changing the loophole that has traditionally allowed private equity firms to pay lower taxes. (Fortunately for both men, politicians seem to have abandoned the plan.) The feud continues. Reportedly, Schwarzman and Kravis have refused to attend the same charity events and have bid against each other at auction for the same pieces of art.

Pet causes

Kravis has been long been one of the city's most active philanthropists. A member of the board of Mount Sinai since 1981, he donated $10 million to the hospital in 1988 and has since contributed millions more, including a $15 million gift in 2002 to fund the hospital's institution's new Valentin Fuster-led heart center. He's also made substantial donations to Columbia Business School (he handed over $10 million in 2006) and has underwritten a wing at the Metropolitan Museum and two galleries at MoMA.

Campaign trail

Kravis is one of the Republican party's most reliable donors. He actively raised money for both of George Bush's campaigns for president and helped organize the Republican convention in New York in 2004. In 2007, he announced his support for John McCain and signed on his as New York State fundraising co-chair.

Personal

Kravis has been married three times. With his first wife, Helene-Diane "Hedi" Shulman, he had three kids: Harrison, who died in 1991 in a car accident shortly after completing his freshman year at Brown; Kimberly, a Harvard MBA and Tiffany's exec who is married to Jonathan Schulhof, the son of former Sony CEO Mickey Schulhof; and Robbie, a film producer.

Henry and Hedi divorced in the early 1980s, and in 1985 he married Carolyne Roehm (née Jane Carolyn Smith), an aspiring fashion designer. Kravis and Roehm led a famously lavish lifestyle during the 1980s: In addition to spending millions on art and Louis XV furniture, Roehm reportedly re-engineered their Connecticut estate so the smell of coffee and croissants could be piped into guests bedrooms to awaken them in the morning. After Kravis invested $20 million in Roehm's upstart fashion label over the course of eight years, the marriage fell apart in 1993. Kravis married his third wife, Marie-Josée, a year later.

Habitat

Henry and Marie-Josée live at 625 Park Avenue, which is home to fellow buyout kingpin David Matlin and former Chanel chief Arie Kopelman. The couple has a weekend home on "Billionaire's Row" in Southampton, an apartment in Paris, a ski house in Vail, and a home in Palm Beach. He set a record in 2006 when he paid $50 million for the Palm Beach mansion.

Off hours

Since his days as captain of his college golf team, Kravis has remained a diehard golfer—he's hits the course weekly. He's also a major art collector, although his tastes have shifted over the years. When married to Roehm, he amassed work by Renoir, Monet, and Sisley. Since Marie-Josée moved in, he's sold many of his impressionist paintings in favor of more contemporary works.