4 ms·
1-out-of-6 might be high. But true, most businesses that are having to sell out are probably on their way out, so maybe 1-out-of-6 is low. Would have to compare
by __s 6y ago
1-out-of-6 might be high. But true, most businesses that are having to sell out are probably on their way out, so maybe 1-out-of-6 is low. Would have to compare relative numbers of roi to overall business
There's also the thought that they should be making their profits from the 85% that succeed, as opposed to not taking a loss on 15% which fail. But question then becomes who's actually losing out on these 15%? ie who's actually paying for the risk, since it seems like a "heads I win, tails you lose" arrangement if losses on 15% aren't being repaid by profits from 85%
- abakker 6y agoI do not think "most businesses that are having to sell out are probably on their way out" is even remotely born out by fact. Many businesses - Dell, Marketo, Informatica, have been bought by PE when they wanted to restructure or change their operating models. But, those companies are not dead or gone. There is nuance here, and the data suggests that bankruptcy is not the end state of every PE buyout.
- formercoder 6y agoDoesn’t have anything to do with “having to sell out.” Often management gets rollover equity and participates in the upside of the deal.