A New Way to Think

13

Capital Investment

Assume that its value is reset as soon as it is embedded.

In 2013 Ellen Kullman, then the CEO of the chemicals giant DuPont and under pressure from shareholders to improve results, decided to sell the company’s performance coatings business, a low-growth, low-profit part of the portfolio. Carlyle Group, a private equity firm, paid $1.35 billion to gain full ownership of the business and renamed it Axalta. Carlyle immediately embarked on a major overhaul of the unit, which involved fairly aggressive investment, especially in developing markets.

A mere twenty-one months later, Axalta was doing so well that Carlyle took it public and recouped almost its entire investment by selling just 22 percent of the company. By 2016, ...