Deal Central and Portfolio Central Training

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    Deal Central & Portfolio CentralAssunta Gaglione-AustinKathy Chang

    Lily Yuen

    July 20, 2012

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    Deal Central Overview

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    Deal Central is used to track KKRs proprietary information about its

    private markets pipeline and portfolio companies. It is a knowledgemanagement tool helping the firm monitor deal flow, investmentbank involvement and report progress on diligence and other dealrelated discussions.

    What does this mean for you? A centralized place to track prospective deals and any new companies you

    monitor, helping with resource allocation across teams and offices

    Change investment status as it progresses through the pipeline

    Keep quantitative information current and update qualitative status notes thatfeed weekly senior management reports

    Repository for final deal documentation (IC Memos, 100 Plans, PMC Memos, etc.)

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    Prospect Portfolio Ex-Portfolio

    Monitor Active PriorityHigh

    Priority

    Completed/Eliminated

    Company Status

    Deal Status

    QuarterlyOwnership& BoardSeats

    Post ICMemos

    Track DealExpenses

    PMCReporting

    Post 100Day Plan

    Ongoing status and commentary updates

    Stages of an Investment

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    Reporting Samples

    Aggregatedpipeline dealflow overtime

    Detailed weekly status reports support the MMM

    Deal flow stats are used bysenior PE management andduring capital raising efforts

    Resource allocation tools

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    Portfolio Central Overview

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    Portfolio Central is a proprietary, customized web based application

    that allows the firm to proactively monitor its private marketsportfolio companies

    With the inception of Portfolio Central, KKRs portfolio reportingprocess has become an industry-leading tool and a competitiveadvantage providing critical management information for a diverse

    set of KKR stakeholders, including our LPs.

    KKRs Portfolio Central was a recipient of the 2011 CIO 100 award(1). The award recognizes projects that advance business strategythrough the innovative use of IT.

    (1) Nash, S. Kim How KKR Used Data Mining For Competitive Advantage CIO.com 2 Sep 2011.http://www.cio.com/article/688776/How_KKR_Used_Data_Mining_For_Competitive_Advantage

    http://www.cio.com/article/688776/How_KKR_Used_Data_Mining_For_Competitive_Advantagehttp://www.cio.com/article/688776/How_KKR_Used_Data_Mining_For_Competitive_Advantagehttp://www.cio.com/article/688776/How_KKR_Used_Data_Mining_For_Competitive_Advantage
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    - Before and After

    BEFORE NOW

    Various definitions of financialspresented.

    Portfolio Central used as standardforon boarding a new company.

    Deal teams manually creatingcharts and tables.

    Portfolio Companies are directlyfiling toPortfolio Central, leaving theDeal Teams to review and approveautomated financials as opposed toentering the data.

    Members and the PMC werereceiving 70+ or more individualemails each month

    Senior management receives 70+fewer emails a month

    Creation of aggregate portfolioreports were entirely manualwhere a person was pulling eachindividual memo and inputting the

    information in a spreadsheet

    We have systematically consolidated allthe data provided. Various stakeholdersreceive an automated monthlyreporting package including trend

    and stack-ranking reports.

    Deal teams received requestsfor the same information atleast 2x by various constituents

    Users can generate their own reports onand ad-hoc basis. There were 0 usersversus 41 users currently with around1,500 automated reports generated.

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    What does this mean for you?

    Financial Filings The Monthly*Process

    - Every month the portfolio company and / or deal team will receive an Excel reporting template from Portfolio Central.

    - Once you have populated all of the requested information, submit the completed Excel file to [email protected]

    - You will receive either a rejection notice or an acceptance notice. If the Excel file has been rejected, the reasons will becited (missing revenue, EBITDA, headcount, etc.) and you can resubmit.

    - You will be sent a draft financial report for the PMC (CPG/LPs on quarter ends).

    - Review and respond to the draft financial report email with either an updated version of the financials or the word final inthe body of the email.

    - The final version of the report will be sent to you and at this time the financials will be available to the firm.

    * Select companies report on a quarterly process

    Reportingtemplate

    emailed toPortfolioCompanyand/or theDeal Team

    Populatedtemplateemailedback toPortfolioCentral

    Templateaccepted orrejected bythe system

    Draftreport(s)

    sent to DealTeam forreview

    Deal Teammarks the

    reportFINAL

    Final reportemailed toDeal Team;financials

    available toall

    1 2 3 4 5 6

    123

    4

    5

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    mailto:[email protected]:[email protected]
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    Deal & Portfolio Central Reporting

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    Things We Request from You:

    ItemReportingFrequency

    Reporting Audience

    Portfolio CompanyFinancials

    Monthly or Quarterly PMC, PE, Capstone, KCM, CPG, LPsInvestor Relations, Macro Team,Management Committee, RiskCommittee

    Investment CommitteeBase Case

    At Transaction Close Investment Committees, PE, PMC,Capstone

    Employee & FacilitiesInformation

    Annually Public Affairs, CPG, PE

    Ownership and BoardSeat

    Quarterly Finance, PE, Legal, Regulators,CPG

    Investment CommitteeDocs

    Weekly Investment Committees

    Coming Soon

    Deal Expense Tracking, Tax Contingencies, IB Fees and Form PF

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    Who uses the information you provide to usVarious constituents use the data. One-off requestshave come to us instead of Deal Teams

    Examples of recurring and ad-hoc reports createdwithout directly reaching out to Deal Teams include:

    PMCMonthly review of revenue, EBITDA, cash flow,

    and leverage; Covenant headroom alerts

    Capstone Margin monitoring; EBITDA flow through

    PE Regional HeadsRevenue and EBITDA on amonthly and YTD basis and by country; Deal pipelineand sourcing

    CPGFTE Headcount; Quarterly Revenue,EBITDA and Net Debt; LP1Pager

    Investor RelationsCalendar YTD Revenue &EBITDA, Net Debt, Leverage, Debt Maturity; EmployeeGrowth

    Public AffairsAnnual ESG report ; Geographictrend on employee and facility growth

    KCM Portfolio wide debt pricing; Counterpartyexposure on revolvers; Projections on interest rateexposure; Interest rate risk management and hedgingstrategy; IB fees (coming soon)

    FinanceOwnership & Boardseats; Tax

    Contingencies (coming soon)

    Macro Team KKR GDP Forecast Model

    Investment Committee Deal expense vs IC budgettracking; IC review report

    Risk CommitteeDebt maturity analysis andexposure; Revenue and EBITDA correlation trend

    Management CommitteeL3M Revenue andEBITDA; Global Debt Exposure

    Deal &PortfolioCentral

    PMC

    Capstone

    Regionalheads

    CPG

    InvestorRelations

    PublicAffairs

    KCM

    Finance

    MacroTeam

    InvestmentCommittee

    RiskCommittee

    Management

    Committee

    Dashboard

    Dashboard

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    Who uses the information you provide to us

    Deal & PortfolioCentral

    PMC

    Capstone

    Regionalheads

    CPG

    InvestorRelations

    PublicAffairs

    KCM

    Finance

    MacroTeam

    Investment

    Committee

    RiskCommitte

    e

    Management

    Committee

    Dashboard

    Dashboard

    Monthlyreview of

    revenue,EBITDA,

    cash flow,and leverage

    Covenantheadroom

    alerts

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    Who uses the information you provide to us

    Margin monitoring

    Deal & PortfolioCentral

    PMC

    Capstone

    Regionalheads

    CPG

    InvestorRelations

    PublicAffairs

    KCM

    Finance

    MacroTeam

    Investment

    Committee

    RiskCommitte

    e

    Management

    Committee

    Dashboard

    Dashboard

    Change inEBITDA

    impact onEquity Value

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    Who uses the information you provide to us

    Deal & PortfolioCentral

    PMC

    Capstone

    Regionalheads

    CPG

    InvestorRelations

    PublicAffairs

    KCM

    Finance

    MacroTeam

    Investment

    Committee

    RiskCommitte

    e

    Management

    Committee

    Geographictrend onemployeeand facility

    growth

    Dashboard

    Dashboard

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    Who uses the information you provide to us

    Deal & PortfolioCentral

    PMC

    Capstone

    Regionalheads

    CPG

    InvestorRelations

    PublicAffairs

    KCM

    Finance

    MacroTeam

    Investment

    Committee

    RiskCommitte

    e

    Management

    Committee

    Dashboard

    Dashboard

    Projections oninterest rate

    exposure

    Interest rate riskmanagement andhedging strategy

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    Who uses the information you provide to us

    Deal & PortfolioCentral

    PMC

    Capstone

    Regionalheads

    CPG

    InvestorRelations

    PublicAffairs

    KCM

    Finance

    MacroTeam

    Investment

    Committee

    RiskCommitte

    e

    Management

    Committee

    Dashboard

    Dashboard

    KKR GDPmodelcreatedusing

    portfolio

    companyoperatingmetrics

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    Who uses the information you provide to us

    Deal & PortfolioCentral

    PMC

    Capstone

    Regionalheads

    CPG

    InvestorRelations

    PublicAffairs

    KCM

    Finance

    MacroTeam

    Investment

    Committee

    RiskCommitte

    e

    Management

    Committee

    Dashboard

    Dashboard

    Consolidated debt maturityanalysis and exposure

    Trending revenue andEBITDA correlation

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    Contact Information

    Deal Central questions?Please email: [email protected]

    Please note that this is NOT the same as emailing [email protected], which willautomatically post your document, comment and/or vcard to the website.

    Portfolio Central questions?Please email: [email protected]

    Please note that this is NOT the same as emailing [email protected], which isused to automatically process the official monthly/quarterly financial templates forportfolio companies only.

    mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]
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    Q & A

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    Appendices

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    Deal Central FAQs

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    How to Add a Deal (1 of 2)

    Investment Information

    Company Name CompanyName, as it will appear in allinternal managementreporting

    Deal Code Name Uniquecode name

    CKA- optional nickname usedfor the company, it willappear in certain reporting

    Status refer to status

    summary below Industry- Companys

    industry group. Sub Industryis optional.

    Rollup Company applies ifthe investment is lateracquired by (or rolled up into)an existing portfolio company

    Office - Office(s) where thecoverage team is located

    Country Location of thecompany

    GeographyBased on thecompanys geographiclocation

    GroupingsUsed to groupcompanies across industrygroups and geographies

    Status Summary Descriptions

    High Priority - A deal that has been through the IC process several times and is in active negotiation. Thereare specific target dates that the team is working towards to complete the transaction.

    Priority - A deal that has been through the IC process at least once and has substantial resources and timebeing committed to it.

    Active - Early due diligence or idea phase. Resources have been committed to the effort and there isongoing research and analysis being done. There is meaningful attention being given to this effort.

    Monitor: The bulk of the deals are expected to fall into this category. Research is in maintenance modeincluding monitoring quarterly financials, press reports and comps in an industry

    1

    1

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    How to Add a Deal (2 of 2)

    Answer public companyinformation (Y/N)

    Deal Information Deal Status - refer to

    earlier status summary

    Deal Type e.g. P2P,Secondary, Private Sale

    Date Initiated defaultsto date of entry unlessotherwise populated

    Transaction Describe the

    transaction as you wouldhave it appear in weeklyPartner reporting

    Transaction Size throughEBITDAas indicated

    Process: e.g. Proprietary,Limited Process, Auction

    2

    3

    2

    3

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    When a Deal becomes a Portfolio Company

    Additional Portfolioinformation:

    Portfolio Type e.g. PE,Capital Solutions, Credit,Principal Investment, etc.

    Headquarters asdescribed

    Portfolio Information Please ignore all fields

    at left unless they arehighlighted in red

    Highlighted fields areall required for portfoliocompanies and areoften aggregated forreporting purposes.They should bepopulated as described.

    55

    4

    4

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    How to Update Ownership and Board Seat Reports (Quarterly)

    Update Tips:

    All data is carried forwardfrom the previous quarter.

    All data is summarized andemailed to all Private SideExecutives. There is a

    wall of shame for thosethat do not finalize by thedue date.

    If nothing has changed,you need to finalize thedata by selecting Finalfrom the dropdown on theleft and then SaveChanges on the right.

    If there have beenchanges to ownershippercentages, board

    membership or entitystructure, please notethese in the fieldsprovided. Then, select

    Final on the left, andSave Changes on theright.

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    Submitting IC Memos to PE IC Docs for Central storage

    Reminders are sent each Thursday to all PE Executives to post their

    weekly deal updates and post all new IC memos to Deal Central

    ONLY send IC documents to [email protected], most easilyaccomplished using bcc: when sending your report to the IC itself.

    mailto:[email protected]:[email protected]