Kinder Morgan Deal Gives Fuel to M.B.O. Critics

Management-led buyouts have gotten some bad press lately, including a controversial article by Ben Stein in The New York Times stating that such transactions should be “illegal on their face.”

The general theme among critics is that when management is involved in taking a company private, they face two, often contradictory, mandates: getting the highest price for their shareholders, and getting the lowest price for themselves and their co-investors.

Against this backdrop comes the recent disclosure that Richard Kinder, the chief executive of Kinder Morgan, waited three months to tell his company’s board that he was considering leading a buyout of the energy company. The deal, valued at more than $27 billion including assumed debt, is among the largest leveraged buyouts ever.