Toys "R" Us leveraged buyout (1978)
Kohlberg, Kravis and Roberts, the future KKR, took Toys "R" Us private in what is widely called the first true leveraged buyout by a modern financial sponsor. They bought the toy retailer with a mix of debt and their own equity, then spent the next three years turning around the business and improving its margins and operating discipline. When they sold, in 1981, they had made a handsome return for their investors.
Why it mattered
This deal created the modern private-equity playbook: a sponsor buys an established company, uses leverage to amplify returns, and then actively runs the business to make it better. KKR went on to become the defining firm of the LBO era, and the Toys "R" Us deal is the origin story of the industry, the moment private equity stopped being a niche practice and became a profession.