In nearly 50 years of experience investing in private companies—through the dot-com bubble, the Global Financial Crisis (GFC), SARS, and the COVID-19 pandemic (just to name a recent few)—we have observed that volatility can open a wide variety of new opportunities. Along the way, we’ve learned valuable lessons about pacing ourselves through cycles and developed repeatable playbooks for value creation that work in all kinds of economic conditions. This is very much in line with the view that “creating your own luck” drives repeatable performance alpha.
The opportunities that arise in times of volatility are not always available to everyone, however. The historical gap between the returns of top-performing and bottom-performing managers is approximately 14%.1 Skill, experience, and resources all matter, and they matter most when markets are complex and challenging.
New Opportunities Arise from Volatility…but Not Every Manager Can Meet the Moment
One thing we have learned since our founding in 1976 is that macro complexity often creates interesting buying opportunities. Volatility in public markets can lead to compelling valuations for take-private transactions, valuable opportunities to spin out non-core assets of larger businesses, new ways to partner with family-owned businesses that need operational and markets expertise, and more sponsor-to-sponsor transactions when IPOs are not a reliable exit route.
Taking advantage of these opportunities is a process that often starts years before a company is acquired. Experienced managers track and develop relationships with potentially attractive companies well before those companies are open to new investment. When the opportunity does come, the manager should have the conviction (and capabilities) to pull off a transaction even in tricky market conditions.
At KKR, two pandemic-era investments illustrate this point perfectly. CIRCOR, a leading global provider of flow control products for diversified industrial and aerospace and defense applications, was a public company our industrial team followed for some time. In 2020, at the height of the pandemic, we acquired a public stake in the company, which enabled us to develop a deep understanding of the business from the inside out. Then, in 2022, approached CIRCOR about going private, but the management team wasn’t ready.
By the time they were prepared to explore an auction process, it was early 2023, when capital markets were highly dislocated after a year of high inflation. However, we were able to deliver speed and certainty for CIRCOR, thanks to our in-depth knowledge of the business, developed over the several years we were invested in the company; our conviction about the potential to create value in the business; our scaled capital; and our KKR Capital Markets (KCM) team, which made it possible to transact at a time when debt markets were extremely challenged. Ultimately, our speed and certainty enabled us to close the deal in October of 2023.
Soon into our ownership, we found ourselves in another volatile time with inflation rising, but we continued to execute on our value creation plan. In our view, CIRCOR’s crown jewel is its aerospace and defense segment, which makes mission-critical actuation components that help control the landing gear, doors, and wings on military and commercial aircraft, as well as highly engineered water and fuel pumps and valves for submarines and surface ships. Transforming CIRCOR’s industrial division holds even greater upside potential, untapped at the time of our initial investment. How do we know? Because we operated a similar playbook with industry peer Gardner Denver, taking it private in 2013 for $3.9 billion to overhaul operations, then taking it public in 2017, and merging it with Ingersoll Rand’s industrial division in 2020 — creating a new company valued at $15 billion at the time. Today, we are busy improving CIRCOR’s industrial operations with more strategic sourcing and lean manufacturing while enhancing its organic growth strategies.
The story of Wella Company, a global leader in professional and retail hair coloring, haircare and hair appliances, is similar. Our private equity team followed Wella for years. In 2015, when Proctor & Gamble (P&G) explored selling the company, we already had conviction behind its business model and loyal customer base. After P&G sold Wella to Coty, a leader in the beauty sector, we continued following the business.
In October 2019, Coty announced a strategic review of Wella, followed by the formal launch of a sale process and first-round bids in March 2020. As the COVID pandemic took hold, we soon became the only sponsor still able to fully engage in due diligence. Given our previous work analyzing Wella — plus our experience with complex carve-outs— we positioned ourselves as a strategic solution provider to Coty, which ultimately agreed to enter into a unique partnership with KKR.
Throughout this process, we leaned heavily on our in-house resources, including KCM and KKR Capstone. KCM secured debt financing at a time when capital markets were frozen, and the deal team worked closely with Capstone to design an operational blueprint for the carve-out and to identify key value creation initiatives that could be pursued as a stand-alone company. As with CIRCOR, our ability to fund the entire equity purchase despite complexity played a critical role in the deal going through. In parallel with our investment in Wella, we also invested in Coty.
The tariff-driven market dislocation of 2025 appears to be no exception to the idea that scale and partnership can help private equity firms buy attractive companies even under challenging conditions. In April 2025, we signed an agreement to acquire a majority stake in Karo Healthcare, a leading pan-European consumer healthcare company, from another sponsor. Given the current volatility, the deal would not have been possible without the deep underwriting capabilities of KCM, which enabled us to execute this transaction without relying on staple financing. Close collaboration across our global private equity team – leveraging expertise from our Nordics team and healthcare and consumer sector leads – enabled us to develop a strong conviction in this business, supported by our deep experience creating value for leading consumer healthcare platforms. Karo has a diversified platform of strong consumer health brands under its umbrella, including defensive products that consumers need regardless of the economic cycle, and the vast majority of its sales are across European markets. We see opportunities to expand into new channels, add new products into the mix, and focus on underserved categories when we formally acquire the company.
Value Creation Doesn’t Stop in a Crisis
As the world emerged from the pandemic, we increased our ownership in Wella and successfully carved the company out from Coty. In parallel, we started our most important work: making the company more valuable. We made a strategic acquisition, recruited new executives and board members, and started working on several long-term value creation initiatives. These included driving an omnichannel sales strategy, investing in digital capabilities, improving the product development process, and increasing efficiency.
Steady Deployment Wins the Day
As both the CIRCOR and Wella deals make clear, being patient investors and having the experience, value creation tool kit, confidence, and, ultimately, capital availability to lean into complex market environments are key to achieving successful outcomes. That’s a lesson we learned the hard way nearly 20 years ago.
In 2006, with the economy booming, we deployed a lot of capital into new deals. When the GFC hit two years later, we couldn’t take full advantage of fresh opportunities because we’d over-deployed two years earlier. Why does this matter? As Exhibit 2 shows, the best-performing vintages in private equity tend to be those that invest in periods of elevated complexity and economic downturns.
In the wake of the GFC, we embraced a linear approach to capital deployment. This means resisting the urge to overreact to the latest trends and instead steadily deploying capital with confidence and discipline during teeth-clenching environments. The reality is that it is very hard, if not impossible, to predict attractive vintage years. The better strategy is to deploy consistently, finding the best opportunities in each vintage year and relying on what you can do to make a good company better, instead of relying on the winds of the market to lift the investment.
The Opportunities in Private Markets and Public Markets Really Are Different
Speaking of clenched teeth: Stock tickers dutifully report moves in public markets all day long, but private markets behave differently and offer different opportunities.
For example, it wasn’t that long ago when the buzz around tech stocks was euphoric, particularly in the United States. These outsized returns, however, came mostly from five-to-10 tech giants surfing a wave of AI momentum on the heels of the ChatGPT launch. As our Global Macro & Asset Allocation team noted last year, the risks of concentration levels in public markets have grown over time (Exhibit 3).
EXHIBIT 3: Over the last decade major equity indices have become more concentrated
