Equity-Washing: KKR, Ownership Works and The Polished New Face of Corporate Greed

Katie & Brian Boland
5 days ago
13 min read

Author’s Note: The inner workings of multi-billion-dollar private equity deals are, by design, confidential. The following analysis of the KKR-CHI Overhead Doors transaction is a reconstruction based on the few details that are public, combined with an understanding of standard, well-documented private equity and tax strategies. While we cannot know the exact structure of this specific deal, the model it represents is one being actively promoted. This post serves as a critique of that model, using the CHI deal as a powerful, illustrative example of how such transactions likely operate. The reason we chose the CHI Overhead Doors deal is that it is often held up as the best deal KKR has done– and importantly, the only one they have made a few details public.

Equity-Washing: How Private Equity is Selling You a Story, Not a Stake

There’s a new buzzword in the world of high finance, a slick marketing term designed to make you feel warm and fuzzy about private equity buyouts: "shared ownership." Spearheaded by giants like KKR and sanitized through non-profits like Ownership Works, it’s a story of enlightened capitalists generously sharing the wealth with the hardworking masses. They host panels, publish glossy reports, and tout feel-good stories of factory workers receiving life-changing checks.

Don't be fooled. This isn't a revolution in worker empowerment. It's Equity-Washing.

Equity-Washing is the cynical practice of using the language and aesthetics of employee ownership to boost a private equity firm's reputation, increase portfolio company valuations, and unlock massive tax breaks, all while stopping deliberately short of granting employees any real power or a truly equitable share of the wealth they create. It’s a performance of generosity, a masterclass in PR where the house—as always—wins.

Consider two perspectives. First, a worker at CHI Overhead Doors who has spent 20 years on the factory floor, perfecting their craft, taking pride in the quality of the product, and seeing the company through good times and bad. To them, the company is a community and a legacy. Now, consider a private equity analyst in a New York skyscraper. To them, CHI is "the asset"—a line on a spreadsheet, a temporary holding to be financially engineered for maximum return over a 5-to-7-year period before being sold to the next owner. Equity-Washing is the tool used to align the motivations of the former to serve the financial interests of the latter.

The Predator in "Shared Ownership" Clothing

Before we go further, it's critical to understand the predator we're dealing with. Private equity is a multi-trillion-dollar industry of giant investment firms that buy up household-name companies—from pet stores to nursing homes to manufacturers like CHI. Their model is simple and brutal: use massive amounts of debt loaded onto the company they're buying (a "leveraged buyout"), aggressively cut costs to boost short-term profits, and sell the company for a huge return a few years later.

According to the book Bad Company, this model is so destructive that 20% of PE-owned companies go bankrupt within ten years—a rate ten times higher than their public counterparts. These astronomical profits are extracted on the backs of low-wage workers through mass layoffs and from average consumers through price hikes. Equity-Washing is simply the latest, most sophisticated PR campaign to put a friendly face on this fundamentally damaging business model.

What Real Ownership Looks Like (And Why We Fight For It)

Before we dissect the charade, let’s be clear: we deeply believe in the transformative power of broad-based employee ownership when it’s done right. The goal isn't just a slightly better version of the status quo. As a recent report from Transform Finance on Alternative Ownership Enterprises makes plain, genuine employee ownership is a powerful tool for systemic change. It’s about creating an economy that is more resilient, equitable, and democratic. It directly addresses wealth gaps by building real assets for workers, it helps shift the balance of power from distant investors to the people and communities who create value, and it creates more stable, productive, and profitable businesses that are less likely to lay off workers in a downturn. That is the prize.

The problem arises when the language of this powerful movement is co-opted. KKR didn't invent "broad-based employee ownership"—the term and its principles were established over decades by advocates and practitioners like Project Equity. What KKR and its non-profit partner Ownership Works are doing is redefining the term to suit their financial model. Ownership Works acts as the PR engine, a third-party sanitizer that gives a veneer of social good to what is fundamentally an extractive financial strategy, twisting a concept rooted in democratic governance and durable wealth-building into a marketing narrative for temporary, bonus-style payouts.

Let's dissect the poster child of this movement, KKR's sale of CHI Overhead Doors, to see how Equity-Washing works in the wild.

The Illusion of Ownership: A Bonus in Disguise

When KKR sold CHI for a staggering $3 billion, it made headlines for distributing $360 million to the company's 800 employees. But to understand this payout, you must first understand the performance. Under KKR's ownership, and fueled by the motivation of its new "employee-owners," CHI saw its revenue grow 120% organically and its EBITDA (a measure of profitability) increase by 3.5 times. Safety incidents fell by over 50%.

These are not just numbers on a page. They represent real operational gains driven by the workforce—the very people, many of whom had been at CHI for decades, who made the company so valuable. KKR, by contrast, was involved for a mere seven years. The people who created the long-term value received a short-term reward. The temporary owners kept the long-term wealth.

The total profit (the "upside") on the deal was roughly $2.3 billion. That $360 million payout to the employees who drove this transformation represents about 15.5% of the value they created. Proponents of genuine employee ownership, like Project Equity, advocate for models where employees own a substantial and durable stake—at least 30% or more of the company. And it is critical to remember that this is the absolute best case private equity example - in KKR’s 2023 annual report they describe the financial benefits as “typically with opportunities to earn over six months’ worth of salary.” Examining the data presented in the 2024 Annual Impact for Ownership Works, the $570 million spread across 160,000 employee owners amounts to an average of $3,562 per employee.

The people who created the long-term value received a short-term reward. The temporary owners kept the long-term wealth.

What KKR offered wasn't true ownership. It was a cash-out bonus, a one-time windfall entirely contingent on the private equity firm's decision to sell. Once KKR exits, so does the "ownership" model, leaving the workers with a nice check but no lasting power or stake in the company's future. As Marjorie Kelly says, "it’s a step up on an escalator that’s moving rapidly down."

The Magic of Leverage: How 10x Returns Happen

To understand the true disparity, you have to look at how private equity works. KKR bought CHI for $685 million. A typical leveraged buyout (LBO) structure involves using a large amount of debt placed on the target company. Let's assume (based on reporting) KKR's acquisition was financed with 50% equity from their fund and 50% debt.

KKR's Equity: ~$342.5 million
Debt (placed on CHI): ~$342.5 million

When CHI was sold for $3 billion, KKR's initial ~$343 million equity investment translated into a massive share of the ~$2.3 billion profit, allowing them to boast of a 10x return on their equity over just seven years. They used the company's own borrowing power (and the employees' labor which paid down that debt) to amplify their gains. The employees received no such amplified return.

The Myth of "Worker Voice": All Talk, No Power

A core tenet of the Equity-Washing playbook is the promotion of "worker voice." In practice, this means employee engagement surveys, suggestion boxes, and maybe a budget for a new breakroom. At CHI, workers were given a voice on things like getting air conditioning in the factory—basic improvements that any sensible management team would implement to boost morale and productivity.

This is not governance. This is a focus group.

True worker voice, as championed by organizations fighting for economic democracy, is about governance. It means:

Board Representation: Workers having a seat at the table where strategic decisions are made.
Voting Rights: Having a say in the company's direction, leadership, and major transactions.
Shared Control: A democratic structure where power isn't concentrated solely in the hands of management and distant investors.

The KKR/Ownership Works model meticulously avoids any transfer of actual control. It’s designed to make employees feel like owners so they act like owners, all without giving them the rights of an owner. They want the upside of an engaged workforce without the downside of ceding an ounce of power.

The Tax-Advantaged Playbook: A Tale of Two Tax Rates

The "generosity" of the employee payout is not a simple act; it's the final flourish on a multi-layered tax avoidance strategy. The playbook ensures that at every stage, the deal is subsidized by taxpayers and the benefits are maximized for the private equity firm and its partners.

Part 1: Corporate-Level Tax Breaks (How to Get Taxpayers to Subsidize Your Deal)

To understand how KKR minimizes its tax bill, think of CHI as a house. KKR is the buyer, and the employees are the family living in and maintaining the house, making it more valuable every year. The goal for KKR is to extract as much value as possible while paying as little tax as possible. Here’s how the playbook works:

Layer 1: The First Mortgage (LBO Interest Shield). When KKR buys the house, they don't use their own money for the full price. Instead, they force the house itself to take out a giant mortgage. For seven years, the employees' hard work goes toward paying down this mortgage. Crucially, the government sees the interest on this loan as a business expense, which reduces the house's taxable income year after year. It's a built-in tax break from day one.
Layer 2: The Second Mortgage (Dividend Recapitalization). A few years later, after the employees have increased the house's value, KKR can force the house to take out a second mortgage—a "home equity loan." But instead of using the cash to fix the roof, the house gives all the money directly to KKR as a special dividend. KKR gets its money back early (avoiding real risk), while the employees are now left to maintain a house that has two mortgages. The interest on this second loan? Also tax-deductible, creating an even bigger tax shield for the company.
Layer 3: The Big "Maintenance" Bill (The Bonus Deduction). When it's finally time to sell the house, KKR gives the employees their $360 million payout. On the tax forms, this isn't a gift; it's recorded as a massive operating expense, like a last-minute, half-a-billion-dollar roof repair. This single deduction drastically slashes the taxable profit from the sale, generating a final, massive tax saving for the benefit of the seller, KKR.

Part 2: Personal-Level Tax Breaks (The Final Insult)

This is where the inequity becomes crystal clear. After using corporate deductions to shield billions in profit, the way those profits are taxed for the individuals involved tells the whole story.

Workers' Payout: Taxed as ordinary income (up to 37%).
PE Partners' Profit: Taxed as capital gains (around 20%).

The people who built the doors and drove the trucks pay the highest tax rate on their small share. The investors who bought the company with borrowed money pay a much lower rate on their massive share. It's a system designed to reward capital over labor at every turn.

The Full Taxpayer Subsidy: A Conservative Estimate

To truly understand the scale of the financial sleight-of-hand at the heart of Equity-Washing, you have to follow the money—specifically, the tax money that isn't paid. It's not one tax break that subsidizes the deal, but a cascade of them working together. Here’s a conservative estimate of the full corporate-level taxpayer subsidy that benefits the private equity owners:

Tax Advantage	Description	Estimated Taxpayer Subsidy
LBO Interest Shield	Tax savings from deducting interest on the initial loan used to buy the company.	$50M+
Dividend Recap Shield	Tax savings from deducting interest on a second loan used to pay a dividend to the PE firm.	$20M+
Bonus Deduction Windfall	Tax savings from deducting the employee payout as a business expense at the time of sale.	$90M
Total Potential Subsidy		$160M+

This means a substantial portion of the already small 15.5% employee share wasn't a cost to the firm, but was effectively financed by the public.

The Two Paths: A Tale of Two Buyouts

The chasm between these two approaches is about more than just the percentage points on a spreadsheet. It's a fundamental difference in philosophy, power, and purpose. The Equity-Washing model treats employees as a temporary tool to boost returns, while a true ownership model sees them as long-term partners in building a durable, shared enterprise. The table below illustrates not just the financial differences, but the profound operational and philosophical gap between the two.

Feature	The KKR / "Equity-Washing" Way	A Baseline Real EO Way
Ownership Stake	~15.5% of the upside, structured as a one-time cash bonus.	30%+ of the company, held in a durable trust (like an ESOP).
Voice	"Worker voice" through engagement surveys and feedback.	Formal governance rights, including board representation.
Control	Remains entirely with the PE firm and its appointed managers.	Workers have a real say in the company's long-term direction.
Durability	Ownership ends when the PE firm sells the company.	Ownership is long-term, building wealth throughout an employee's career.
Primary Beneficiary	The private equity firm's investors and partners.	A true partnership between employees and investors.

An Alternative Vision: What Real Sharing Looks Like

To see just how much wealth was left on the table for workers, let's compare three scenarios for splitting the ~$2.3B in profit from the CHI deal. We'll look at KKR's Equity-Washing model; a true Real EO baseline model that genuinely rewards employees for the value they built; and a truly Visionary Partnership for a Real EO model that resets how we think about ownership. As you'll see, in every scenario, the private equity investors still receive an outstanding return on their initial ~$343M investment.

Model	Employee Share (% of Upside)	Employee Payout	KKR & Investor Share	KKR's Return on Equity
The KKR "Equity-Washing" Model	15.5%	$360M	$1.96B	~5.7x
A Baseline EO Model	30%	~$695M	$1.62B	~4.7x
A Visionary 70/30 Partnership	70%	~$1.62B	~$695M	~2.0x

The numbers are clear: even in a visionary 70/30 partnership, KKR's investors would have still doubled their money in seven years—an outstanding return by any reasonable measure. But the difference in these models goes far beyond the payout amount. In the Baseline and Visionary scenarios, the wealth transferred to employees isn't just a one-time bonus; it's a durable, lasting ownership stake. This creates a permanent asset that benefits not only the current workers but future employees as well, building generational wealth and securing the company's legacy with its community. The choice not to pursue this path wasn't about financial necessity. It was a choice to hoard the wealth and offer a temporary, tax-subsidized payout with altruistic press from the media instead of real, lasting power.

Truly equitable models aren’t just a thought project - people are building them today. Investment funds are proving that you can create durable, high-impact employee ownership that provides both excellent returns for investors and transformative wealth for workers. Funds like Apis & Heritage, which focuses on converting companies with large workforces of color into 100% employee-owned businesses, and Common Trust's Groundwork Fund, which uses a trust model to ensure permanent shared ownership, are pioneering these approaches. Torana's Essential Owners Fund is another key player, providing flexible capital to help frontline workers become owners. These efforts stand in stark contrast to the Equity-Washing model, proving that real, lasting, and meaningful employee ownership is not only possible, but a powerful investment strategy in its own right.

A Final Note: Tax Incentives are a Tool for Good, Not a Costume for Greed

Let's be unequivocally clear: this is not an argument against tax incentives for employee ownership. On the contrary, we are highly in favor of them. Public policies that encourage and subsidize the transition to genuine employee ownership are critical tools for building a more equitable economy. Many legitimate, broad-based, and democratically governed employee-owned companies use these tax advantages for their success—and that is a good thing.

The outrage is not that tax subsidies are used, but how and for whom. The critique is aimed squarely at financial engineers who dress up in employee ownership clothes to hijack these benefits. When incentives designed to empower workers are co-opted to simply enhance the returns of a temporary owner, while providing only a fleeting, non-governing, minority benefit to employees, it's a perversion of the policy's intent and an insult to taxpayers. We must champion the policies, but fiercely reject the charade.

How to Spot Equity-Washing: A Quick Guide

Private equity isn't a niche corner of finance anymore; it's a dominant force that now employs nearly 12 million Americans, controlling vast swaths of our economy. As this model continues its takeover of small and mid-sized businesses, we face a dual challenge: we must both build better, more equitable ownership models from the ground up, and simultaneously demand that private equity doesn't get to pillage our communities in the name of 'good'. We cannot let them get away with offering a small step up on a rapidly descending escalator. Holding them accountable starts with asking the right questions.

It's a system designed to reward capital over labor at every turn.

When you see a company touting "shared ownership," ask these three simple questions:

What is the stake? Demand to know the employee-owned percentage of the total company or upside. A dollar amount without context is meaningless.
Is it durable? Does the ownership last beyond the current owner's exit and provide financial and governance to future generations of employees, or is it just a one-time bonus?
Is there real governance? Does "worker voice" include a seat on the board and real voting power, or is it just a suggestion box?

The Path Forward: Building Real Ownership

The good news is that we don't have to settle for the illusion. Across the country, an ecosystem of amazing organizations is building real, durable, and democratic employee ownership. The answers to the questions above will guide you to them. These are the groups creating the best outcomes for workers, which is more critical than ever in a society where wages have stagnated and benefits have eroded.

For investors, the call to action is clear: move your capital away from predatory PE models and toward the organizations doing the real work. Support the funds we've mentioned like Apis & Heritage, Common Trust, and Torana, and the community-based lenders and capital providers like Seed Commons, Shared Capital Cooperative, and the Boston Impact Initiative. These are the groups building a healthier economic system that works for all. Choosing to invest in them is not just a financial decision; it's an empowering step toward the equitable future we all deserve.