4 ms·
> Most of these firms will strip the company bare, cut expenses to the bone and try to sell the company to someone else for a profit. While this strategy may wo
by Chaebixi 9y ago
> Most of these firms will strip the company bare, cut expenses to the bone and try to sell the company to someone else for a profit. While this strategy may work very well for traditional manufacturing firms, I'm highly skeptical of software/tech companies.
I don't think it works well for any industry. My understanding is private equity has a really bad track record of ruining the long term future of the business it touches. They're just skilled at getting the cash out and selling the business to a chump before things get bad.
- ubernostrum 9y agoI don't think the parent comment disagrees with you on the effect private equity has on the targeted company. I think the question they were asking was whether a primarily tech company can produce the profits the private equity wants from destroying the company, since tech companies don't have the kinds of assets that, say, a manufacturer does (factories, tools, etc.).
- rpedela 9y agoIf Rackspace has a decent patent portfolio, then that would be just as valuable as factories, tools, etc if not more valuable.