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From the specific items in the article: >For example, private equity firms often sell off a company’s real estate — and then lease it back from the new owners.
by xkcd-sucks 7y ago
From the specific items in the article:
>For example, private equity firms often sell off a company’s real estate — and then lease it back from the new owners. While this may seem an odd maneuver, the practice allows the private equity firm to distribute a quick real estate profit to their investors. The Warren proposal would block such a maneuver for the first two years after a company is purchased.
>Another piece of the legislation would essentially block companies from taking “monitoring fees” or “transaction fees” out of the companies they buy. These fees simply force companies to turn over money to the private equity firms.
>Finally, what may be the most critical piece of the proposal would rein in one of private equity’s characteristic methods of investment: They use a lot of debt to buy companies. That debt often becomes a burden to the company and has played a key role in many bankruptcies. The proposal would make the use of debt far less attractive for private equity firms because it would hold the private equity firms — and not just the company — responsible for its repayment.