KPS Capital Partners Elevates Three to Managing Director

KPS Capital Partners promoted three investment professionals to Managing Director on Monday, elevating a trio of insiders who've spent a combined three decades at the firm. Tejas Dessai, Jake Erhard, and Ross Stevens all joined KPS between 2014 and 2016 and have worked on some of the firm's highest-profile manufacturing and industrial deals over the past eight years.

The moves come as KPS — which manages $17.5 billion focused almost exclusively on middle-market industrial companies — continues building out its senior ranks from within rather than recruiting laterally. All three executives previously held Principal titles and have been involved in multiple platform investments and add-on acquisitions across the firm's core sectors: automotive, basic materials, manufacturing, and logistics.

KPS didn't announce the promotions alongside a new fund close or major exit, which makes the timing notable. The firm's most recent fund, KPS Special Situations Fund V, closed at $6.7 billion in 2021 — still one of the largest pools ever raised for industrial-focused PE. These promotions suggest KPS is thinking about succession and deal team capacity as it works through deploying that capital and prepares for an eventual Fund VI raise.

The firm's bet: promote people who know the portfolio, understand the operational improvement playbook, and have already closed deals rather than bring in outsiders. That's increasingly the norm at upper-mid-market industrial PE shops, where domain expertise and relationships with management teams matter more than financial engineering. But it also means KPS is doubling down on a relatively small group of senior investors — which works until it doesn't.

Tejas Dessai joined KPS in 2014 and has worked across the firm's manufacturing and basic materials portfolios. According to the announcement, Dessai played a key role in investments including Granite Holdings, Cenveo, and Tekni-Plex — all core KPS deals involving operational turnarounds or carve-outs from larger parents. He previously worked at Blackstone and holds an MBA from Harvard.

Jake Erhard came to KPS in 2015 after stints at CCMP Capital and Deutsche Bank's investment banking group. His deal experience includes work on Wagon Automotive, a European automotive supplier KPS acquired in 2020, and Clean Harbors' oil and gas division, which KPS bought and rebranded as Emerald Services in 2021. Erhard's background leans heavily into automotive and industrial services — two of KPS's deepest areas of focus.

Ross Stevens joined in 2016 and has been involved in the firm's logistics and manufacturing platforms. Stevens worked on the 2020 acquisition of GXO Logistics' contract logistics business and the 2019 investment in Spectra Packaging, a flexible packaging manufacturer. Before KPS, Stevens was at Advent International and Goldman Sachs. He holds an MBA from Wharton.

All three share a common profile: top-tier banking or PE backgrounds, roughly 10 years at KPS, exposure to multiple deal cycles, and deep involvement in operational value creation rather than just deal origination. That's the KPS model — investors who can sit in plant manager meetings and talk capex optimization, not just IRR projections.

KPS's decision to elevate internal talent rather than recruit experienced MDs from competitors reflects a broader shift in how mid-market industrial PE firms think about talent. Unlike growth equity or tech-focused funds — where lateral hiring is common and investors move between firms frequently — industrial shops tend to value institutional knowledge and long-term portfolio relationships.

There's a practical reason for this. KPS's deals often involve multi-year operational transformations: restructuring supply chains, consolidating manufacturing footprints, renegotiating labor agreements, integrating acquisitions. An investor who led the initial buyout often stays involved through the entire hold period, working alongside management teams for five to seven years.

That continuity is harder to maintain if senior investors leave for other firms every two to three years. By promoting from within, KPS ensures the people running deals today will still be around when those companies hit exit milestones in 2027 or 2028.

It also signals to junior investors that there's a clear path to partnership — assuming they're willing to stick around. That matters in an environment where private equity compensation has become more competitive and younger investors have more exit options than they did a decade ago.

But internal promotions also create succession planning risks. If KPS is relying primarily on people who've only worked at KPS, the firm's investment approach and deal-sourcing networks risk becoming insular over time. Most of the firm's senior leadership — including founders Michael Psaros and David Shapiro — have been with KPS since its founding in 2000 or shortly after. The next generation of leaders will need to balance that institutional continuity with fresh perspectives.

KPS announced these promotions in early February 2025, roughly midway through the deployment cycle of its $6.7 billion Fund V. The firm has been relatively active since that fund closed in 2021, completing deals like the acquisition of MillerKnoll's contract furniture division and the investment in Pactiv Evergreen's foodservice business.

KPS Capital Partners has built its reputation on a specific type of deal: buying underperforming or undervalued industrial businesses — often from larger corporations looking to shed non-core assets — and then spending years improving operations, cutting costs, and repositioning them for growth. The firm's portfolio includes companies in automotive parts, packaging, building products, chemicals, and industrial services.

This isn't financial engineering. KPS doesn't flip companies after 18 months. The firm's average hold period is closer to six years, and some investments run even longer. That requires a different kind of investor — someone who can read a P&L, yes, but also someone who understands how to optimize a production line, renegotiate supplier contracts, and work with plant-level management teams.

The firm's deals often involve significant capital investment upfront: modernizing equipment, integrating acquisitions, consolidating facilities. That operational heavy lifting requires senior investors who can stay close to management teams and make real-time decisions about capex allocation, hiring, and strategic pivots.

That's why having a deep bench of Managing Directors matters. If KPS is managing 15 to 20 active platform companies at any given time — each requiring board-level oversight, add-on acquisition support, and exit prep — the firm needs enough senior investors to cover that workload without burning people out.

These three promotions bring KPS's Managing Director count to roughly a dozen, according to the firm's website and public filings. That's a reasonable ratio given the firm's $17.5 billion in AUM and portfolio size, but it also means each MD is still juggling multiple investments simultaneously.

One area where KPS relies heavily on senior investors: executing add-on acquisitions. The firm's strategy often involves buying a platform company and then bolting on smaller competitors or adjacent businesses to achieve scale, enter new geographies, or vertically integrate.

For example, when KPS acquired Wagon Automotive in 2020, the firm spent the next two years acquiring additional European automotive suppliers to create a larger, more diversified business. Similarly, after buying Emerald Services from Clean Harbors, KPS rolled up several smaller oilfield services and industrial waste companies to expand the platform's reach.

KPS occupies a specific niche in the private equity market. It's not a mega-cap fund competing with Apollo or KKR for $10 billion carve-outs. It's also not a lower-mid-market generalist buying software companies and healthcare services businesses.

Instead, KPS is one of a handful of firms — alongside Platinum Equity, H.I.G. Capital, and Broad Sky Partners — that focus almost exclusively on industrial, manufacturing, and basic materials companies in the $500 million to $3 billion enterprise value range.

That market segment has gotten more competitive over the past five years. As growth equity and tech-focused PE firms have faced valuation compression and exit challenges, more capital has flowed into industrial deals. Industrial businesses tend to generate steady EBITDA, have hard assets as collateral, and offer operational improvement opportunities that don't depend on multiple expansion.

But competition has also pushed up purchase price multiples, even for distressed or underperforming assets. KPS's historical edge — being one of the few firms willing to take on operational complexity — is less differentiated now that more funds have built out industrial expertise.

KPS was founded in 2000 by Michael Psaros, David Shapiro, and Jay Bernstein. Psaros and Shapiro remain active as co-Managing Partners, but both are now in their 60s. The firm hasn't publicly addressed succession planning, but these promotions could be an early signal that KPS is building the next layer of leadership.

Most PE firms go through some version of this transition. The founders who built the firm eventually step back from day-to-day deal execution, and a new generation of partners takes over. The challenge is maintaining the firm's investment discipline and culture while allowing the next cohort to put their own stamp on strategy.

KPS didn't disclose the financial terms of these promotions, but Managing Director titles at upper-mid-market PE firms typically come with meaningful increases in carry allocation and equity ownership in the management company.

At a firm managing $17.5 billion, carry from successful exits can be substantial. If KPS generates a 2.5x net return on Fund V — a reasonable target for industrial PE — the fund would return roughly $16.75 billion to investors and generate around $3.35 billion in carried interest for the firm (assuming a 20% carry after preferred return). Managing Directors typically receive 0.5% to 2% of total fund carry, depending on seniority and deal involvement.

For these three executives, that could translate to tens of millions of dollars in carry over the life of Fund V, assuming the portfolio performs well. But that carry vests over time and only pays out after exits, which means these promotions also represent a long-term retention tool for KPS.

These are rough industry benchmarks — actual compensation at KPS could vary significantly based on deal performance, seniority, and individual negotiation.

The equity ownership piece is arguably more important than carry in the long run. If Dessai, Erhard, and Stevens now own a small percentage of KPS's management company, they participate in the firm's management fees (typically 1.5%-2% of committed capital annually) and have a stake in the enterprise value of KPS itself — which could eventually be sold to a larger PE firm, taken public, or transitioned to employee ownership.

KPS hasn't formally announced plans for Fund VI, but the firm's historical cadence suggests a new fundraise could launch in 2026 or 2027. Fund V closed in 2021, and KPS typically spends three to four years deploying a fund before raising the next one.

These promotions position KPS to tell a succession story to LPs. Institutional investors want to know that the firm has a pipeline of senior talent capable of leading deals independently — especially if the founders are gradually stepping back.

The challenge for KPS: convincing LPs that a sixth fund can generate returns comparable to prior vintages, even as competition in industrial PE intensifies and purchase price multiples remain elevated. Fund V was raised at the peak of the 2021 PE boom, when capital was cheap and exit multiples were high. Fund VI will likely launch into a more uncertain environment.

That's where having a deep bench of Managing Directors helps. LPs want to see that the firm can source deals, execute operational improvements, and drive exits without relying entirely on one or two senior partners. These promotions give KPS more credibility on that front.

But they also raise a question: if KPS is promoting internally and not recruiting laterally, is the firm's deal-sourcing network becoming too insular? Industrial PE is a relationship-driven business, and firms that rely too heavily on the same set of intermediaries, bankers, and corporate development teams risk missing deals or overpaying when they do compete.

For Dessai, Erhard, and Stevens, the next two years are critical. They'll need to prove they can lead deals from sourcing through exit, manage portfolio companies through a tougher macro environment, and help KPS position for its next fundraise.

For KPS, the promotions are a signal — but only a signal. The real test is whether the firm can maintain its operational improvement edge as more capital flows into industrial PE and competition for quality assets intensifies.

And for the broader industrial PE market, KPS's bet on internal talent is worth watching. If promoting from within works — if these three MDs lead successful deals and help drive strong Fund V returns — expect other industrial-focused firms to follow suit. If not, the pendulum could swing back toward lateral hiring and external recruiting.

Either way, the next chapter of KPS's story is being written by the people who've been there all along. Whether that's an advantage or a limitation will depend on how the portfolio performs over the next three to five years.