Fundamental business improvement is the foundation of our investment strategy. CD&R has developed a global reputation as the pioneer of active management in private equity and has received broad recognition for its unique business model of generating superior returns by enhancing the business performance of portfolio companies.

We invest in market-leading companies that are typically underperforming. Often, but not exclusively, our portfolio businesses are distribution- or services-related. Rather than pursuing specific industry segments, we concentrate on companies with broad “spread of risk” characteristics, such as large customer and supplier bases and diverse revenue streams. In all cases, we only invest where significant value can be created through operating performance improvements.

CD&R investments frequently involve substantial complexity. This complexity may take the form of challenges associated with the acquisition of large corporate divisions or complicated transaction structures. More than two-thirds of our investments have been corporate divestitures that involved managing a range of delicate employee, customer or supplier issues, or other matters related to an ongoing commercial relationship with the parent company. In the divestiture of VWR International by Merck KGaA, VWR continued to distribute a significant amount of high-margin Merck-branded products after the sale. As a result, CD&R’s extensive experience with large corporate divestitures and proven operating capabilities were critical considerations for the seller. In the case of Sally Beauty, a leading specialty retailer and distributor of beauty supplies, CD&R demonstrated its ability to handle structural complexity. Sally was acquired as part of an innovative $3 billion recapitalization of Alberto-Culver, enabling the parent to create significant shareholder value.

CD&R has also successfully acquired stand-alone businesses in need of strategic repositioning. Kinko’s required the simultaneous acquisition of 127 separate subchapter S corporations when we made our investment. We transformed the company from a loose confederation of copy shops into a world leading document management business. In the case of Brakes, a U.K.-based foodservice distributor, the family that controlled the company selected CD&R to take the business to the next level of profitable growth. Under our ownership, the company’s profits grew 70% as a result of a number of CD&R-led initiatives to expand margins, reduce costs, restructure operations and integrate acquisitions, all of which helped to make Brakes one of Europe’s leading broad line foodservice distributors.

CD&R’s investment focus, the composition of our professional base and the structure of our processes all serve to support this strategy of value creation through operating improvement.

• Value created through operational improvement. We believe that an investment approach based on operating improvements represents the most effective method of achieving consistently attractive risk-adjusted returns. The Firm differentiates itself through its ability to identify and drive initiatives that create long-term value. View video
• Focused sourcing model positions CD&R for differentiated deal flow. Because of the Firm’s clearly defined investment focus and its strategy to invest in a limited number of transactions, CD&R builds a targeted pipeline of potential investments particularly suited to our operating capabilities and commits significant resources to sourcing these investments over a multi-year timeframe. View video
• Disciplined and clearly defined investment focus. CD&R focuses on businesses that are fundamentally well positioned, that have broad “spread of risk” characteristics, and in which the Firm can identify and drive returns through “controllable” operating improvements and transformation. View video
• Conservative capital structures.  In financing our portfolio companies, we want to ensure that management always has the balance sheet flexibility to execute long-term business building strategies even in challenging times. View video