Barbarians at the Gate (25 page)

When Kohlberg suggested he might leave, neither Kravis nor Roberts argued with him. Both sides hired lawyers, and a severance agreement was negotiated over a period of months. By the spring of 1987 it was completed and, in June, Kohlberg’s departure was announced to the firm’s investors. The rift between the partners was hinted at but never explained. Kohlberg and his son, along with George Peck, soon founded their own LBO firm, Kohlberg & Co., which pointedly concentrated on small, strictly friendly deals. Kohlberg almost never spoke of the rift, and when he did he hinted of his disapproval of Kravis and Roberts’s growing appetite for larger fees and bigger, more aggressive deals. “I won’t restrict myself to small transactions,” he told
The New York Times
in 1987, “but I’ll stick with deals where reason prevails.” Kravis and Roberts read the comments and thought Kohlberg was erecting a smoke screen to hide the real reasons behind his departure.

“It makes me sad,” Roberts said in a mid-1989 interview. “It’s like a divorce. Of the twenty-four years I worked with Jerry, nineteen were idyllic. The last five were not…. I feel like I lost a good friend. The decision we made for him to leave was best. But personally, it was very tough on me. Still is.”

By the time Jerry Kohlberg left Kohlberg Kravis, his office had lain empty so long it was regularly used by visiting lawyers. With its Talmud and collection of Lucite tombstones, the lawyers dubbed it “the LBO library.” When the offices were remodeled in 1989 after a fire, Henry Kravis had it turned into a stairwell.

Jane Smith was a skinny, bright, energetic fashion student at Washington University in St. Louis, the kind of “good girl” who wore pearls and nice skirts to peace rallies and who once called her mother when she couldn’t find her way back to the sorority house. Upon graduation she journeyed to the fashion capital of the world, New York’s Seventh Avenue, only to quit her first job after two days when her supervisor suggested she clean the bathrooms. Moving on to another firm, she rode the subway each day and scraped by in a tiny apartment, always making sure to have plenty of fresh flowers and a bubble bath. “Beauty and glamour,” she liked to say, “are a state of mind.”

After paying her dues in polyester for eleven months, Jane Smith got up the gumption to take her portfolio to her idol, Oscar de la Renta. De la Renta wasn’t terribly impressed, but she was persistent. She signed on as a design assistant, and soon twenty-four-year-old Jane Smith was playing Eliza Doolittle to the famed designer’s Henry Higgins. She took cooking and riding lessons, learned French, and tried hard to be a charming dinner partner. At the office she was sweet and innocent, a crier not a yeller, still the ideal prom date who talked about themes in gift wrapping.

The earliest casualty of her self-transformation was her first name. She would introduce herself as Jane Smith and hard-bitten Seventh Avenue types would say, “Yeah, and I’m Tarzan.” A boyfriend suggested she go by her real first name, Carolyne, and it stuck.

So, unfortunately, did the boyfriend. Axel Roehm, heir to a German chemical fortune, was tall, dark, handsome, European, and rich; in short, her fantasy of the ideal husband. They married and, as Carolyne Roehm, she moved to Darmstadt, Germany, to lead the life of a wealthy, lonely hausfrau. After a year of domestic boredom Roehm ran back to de la Renta in tears, the marriage a failure. De la Renta gave her responsibility for his lower priced. “Miss O” line and the traumatized young divorcée
threw herself into the work with a vengeance.

A year later, in 1979, she met Kravis at a party. It wasn’t love at first sight. Kravis was too short, for one thing, and he had a boring job on Wall Street. He was also married, although separated from his wife of nine years. After a Christmastime skiing date in Vail—Roehm’s mother chaperoned—they began seeing each other. Theirs was not a storybook love affair. Roehm, coming off a tough divorce, was a reluctant target. “It was a friendship,” Roehm recalled. “Being together with Henry was like putting a wonderful salve on a bad wound…. [My recollection] is not clouded by the romance of the beginning, because there wasn’t one. We were friends for a long time before I thought of him as a lover.”

Kravis’s marriage had been on the wane for years. In 1970 he had wed Hedi Shulman, the daughter of a Brooklyn psychiatrist. The Kravises, with a Park Avenue apartment and rented summer homes in Greenwich or The Hamptons, had always been social climbers. But by most accounts, Kravis, his later riches still a dream, balked at his wife’s spending habits.

“Hedi always wanted to buy the biggest and the best, the most,” recalled a family friend. “Henry didn’t like to spend money at that time. Hedi was driven by the dollar. It drove Henry crazy. It was personally embarrassing to him to have to explain to people out in North Carolina why his wife was going off to a summer home with their staff.”

One summer evening Kravis stepped off the train in Greenwich to find Hedi waiting expectantly. “Henry, I’ve found the most wonderful house to buy!” she enthused. She drove Kravis out a lonely road where mansions lay a mile apart. Down a long, wooded lane she led him, emerging before a virtual castle. Kravis, unnerved, didn’t even want to get out of the car.

Kravis attacked the courtship of Roehm with all the zest of a major takeover contest. On their way to a formal dinner one night, he insisted she test a pair of new tennis shoes; he despised the ratty old sneakers she had worn for years. Roehm, trying her damndest to slip into a red lace dress, finally relented and took a shoe. In its toe she found a diamond necklace.

“As far as romance goes, Henry has fantasy,” Roehm says. “It’s not Oscar Wilde, but of all the business types I’ve gone out with, he’s by far the most romantic. Every anniversary, every Christmas, every birthday, he writes me these sweet, long letters about what he’s feeling. You know, ‘My faith, my love, my belief in you.’ They’re very touching letters. I’ve kept all of them.”

They were partners in business before marriage. In 1984 Kravis agreed to invest several million dollars to bankroll Roehm in her own design business. She rented half a floor in the Seventh Avenue building that also housed Lauren, Beene, and Blass. Unveiled in a show seven months later, Roehm’s first collection of elegant evening wear and sprightly day wear was a triumph. When she strolled out for the standing ovation, a teary Roehm waved to the man who made it possible, Henry Kravis. He was crying, too.

Roehm was ready for marriage, but Kravis, after finally getting a divorce in 1984, apparently was having second thoughts. One day, as she frantically prepared for her first showing, Roehm broke down in tears before her mentor. “I don’t think Henry will marry me,” she said. De la Renta, ever the father figure, called Kravis. “You’re going to tell me this is none of my business, and it is none of my business,” the designer said. “I understand that you’ve had a bad divorce and may not be in the mood to marry again. But I’ve got to tell you: I will be very disturbed if Carolyne becomes the mistress of an unmarried man. I think she’s better than that. I will use all my influence to break the relationship.”

When Kravis finally asked for her hand, Roehm wavered. They were in Italy, where Roehm was shopping for new fabrics for her next collection. “I said I had to think about it,” she recalled. Crestfallen, Kravis pestered her about it all evening and into the next day. “He kept saying, ‘I can’t believe you said that, I can’t believe it.’ Every five minutes it was, ‘What’s your decision?’ He kept at me all the next day until finally, around three, I said, ‘Well, okay.’”

Days before their wedding the couple moved into an apartment whose elaborate furnishings immediately became the talk of the town. English and French antiques from Louis XV to Empire filled the “public rooms,” where rich, silken draperies fell in puddles onto the floor. On the living room’s celadon walls hung a Renoir, across from a Monet landscape. In his library Kravis preferred English horse paintings. A drawing room held a Sisley, a second Renoir, and Dutch flower paintings. The apricot and yellow damask dining room, with its massive Sargent, conjured up visions of a grand English manor house. Coral damask lined the walls and silk festoon shades adorned the windows. To one side was a
faux-marbre
dining alcove, where Roehm would place a trio—two violinists and, say, a harpist—to play softly for dinner guests.

Four years later
GQ
would enshrine the Kravis-Roehm wedding, along
with that of Charles and Diana, as one of the “twenty weddings of the century since 1980.” Their vows, exchanged at the apartment, were followed by dinner for 101 and a toast by Kravis’s father. “Henry’s always been impatient,” said Ray Kravis. “He was born premature, and he’s been in a hurry ever since.”

The newlyweds cut a wide swath through Manhattan society. Kravis, already on many of the “right” boards—New York City Ballet, Mount Sinai Hospital, the exclusive Spence School—leapt onto the coveted Metropolitan Museum board and had a museum wing named after him. Roehm, whose dresses cost up to $8,000 and are worn by the likes of Barbara Walters and Sigourney Weaver, attained the New York Public Library board of trustees and orchestrated memorable galas for the Metropolitan Opera and the New York Winter Antiques show. The Kravises added a beach home in The Hamptons, a ski chalet in Vail, and a pre-Revolutionary manor in Connecticut, where Roehm gardened and rode horses and Kravis sometimes raced around on a Honda four-wheeler. Despite his burgeoning fortune—variously estimated at between $200 million and $350 million—the Kravises continued to work grueling twelve-hour days, traveling constantly.

When in New York they went out nightly, becoming mainstays of
W
and
Women’s Wear Daily,
in large part because Roehm, threatened by up-and-coming designers like Donna Karan, made a conscious decision to seek the social limelight. Her clothes were intended for women like herself—tall, thin, and rich—and she saw the society pages as her best bet to stand out in a crowded field.
W
noted wryly that in her quest for publicity, Roehm appeared “on the cover of every imaginable publication, including real-estate listings.” It wondered: “Is
Pravda
next?”

In many ways it was a storybook life. Summers in Salzburg. Holidays in Vail. Weekends hunting pheasant in Connecticut. Evenings at glittering charity balls. Mornings with Roehm strolling through the Renoirs, an aria on her lips. Their West Highland terrier, Pookie, walked each day by a liveried servant. Of all the stories, the one told most often was of the night Kravis surprised his wife in bed with an eye-popping emerald necklace. When she wore it to a Council of Fashion Designers cocktail party, it was the talk of the crowd.

“Where did you get those?” asked a longtime friend.

“I found them under my pillow,” Roehm replied.

“And where have you been sleeping?”

“In the right bed.”