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So apparently private equity firm, KKR, sold off C.H.I, a garage door manufacturer to Nucor for $3B. KKR in turn used a chunk of the profits made and distributed it to virtually every employee of C.H.I based on tenure and income. On average, hourly workers were paid $175K while some of the more tenured workers were paid over $750K. Many of the workers have no intentions of leaving C.H.I after the windfall.
Make no mistake, KKR is still making a lot of money for the sale of the company, but what do you think of this model? I can see many arguing that the workers were a major part of building up the value of the company through the years, while I can see others thinking this payout as ridiculous. Thoughts?
I am more curious how a garage door maker can be worth that much. Its a really just a door. Sometimes with a motor. The barriers for entry into this market should not be so prohibitive as to ensure that only a few players can dominate entire market enabling them to valued so high.
I mean come on, its a friggin door. And its not the only item I wonder about. Apparel is another, especially shoes. What happened to the cobbler with the shop? Didnt everyone's grandma know how to sew? How much can a ball of yarn possibly cost?
Last edited by NJ Brazen_3133; 05-17-2022 at 11:20 PM..
Employee Ownership is a misnomer as is the characterization of giving rank-and-file workers equity grants. Sale bonuses have been around forever. This is a way for the PE firm to make sure they exceed their target returns before sharing anything with employees. They couldn't do that if they actually gave them stock in the company when they made the original investment.
Don't get me wrong, I think it's a good thing that they're doing, but I'd be curious to know how much of the $3 billion actually went to the employees.
I am more curious how a garage door maker can be worth that much. Its a really just a door. Sometimes with a motor. The barriers for entry into this market should not be so prohibitive as to ensure that only a few players can dominate entire market enabling them to valued so high.
I mean come on, its a friggin door. And its not the only item I wonder about. Apparel is another, especially shoes. What happened to the cobbler with the shop? Didnt everyone's grandma know how to sew? How much can a ball of yarn possibly cost?
Is it really hard to value a leader in the business who provides doors/openers for a large portion/majority of both commercial and residential applications? I mean it shouldn’t be all that far fetched really
The employees were given equity in the company when the company was valued at 1/10 the current valuation. Company productivity was improved but also employee conditions were improved. And the company was expanded.
Private-equity often just reduces costs, increases debt, and pays itself a dividend. This management of C.H.I. is more of an operational success.
KKR began with the company in 2015 with the first wage increase in 2020. So in spite of what the press release says, it appears that the equity grants and employee engagements might have controlled wage demand.
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