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Is there anyone that gets bought out by a PE company that doesn't go to absolute shit? QlikTech, Sencha, TravisCI all got bought and suffered a marked decline

Is there anyone that gets bought out by a PE company that doesn't go to absolute shit? QlikTech, Sencha, TravisCI all got bought and suffered a marked decline in service and roadmap confidence. Nowadays, when I hear someone is bought by a PE firm, I start looking for the exits.

tedivm 6y ago
I remember when LimeLight Networks got bought out by PE and their services turned to crap in about six months. It got so bad we got lawyers involved to break our contract with them.
hn_throwaway_99 6y ago
I really wonder about this when it comes to the longer term viability of tech-focused PE firms. The following seem to be absolutely truisms: 1. The second a company is bought out by PE, all the good employees run for the exits. Corporate America isn't exactly known for its empathy and compassion, but working for a PE-owned company means you can be sure the ownership gives 0 shits about anyone working at the company. I have never heard anything but horror stories of those working for PE-owned shops. 2. Given #1, it means the products of said companies always turn to shit pretty fast. This makes me really wonder about how PE firms can really work their financial magic in the long term. Perhaps they're just better at extracting value out of companies that are already declining in the first place, so they just suck the blood dry before they discard of the carcass?
- ska 6y ago
  re: the latter, the company doesn't have to be declining - although that usually makes it easier to buy. The transaction from the point of view of a PE company is a very different game than say, a product person looking at what could be "done" with a company.
- RedShift1 6y ago
  That's exactly what they do. Buy when it's good, extract as much money as they can and then sell it on or run it into the ground.
- theonemind 6y ago
  personally, I think PE works something like: it's easier to cut costs than create value, so they buy something, and cut costs like crazy. It'll work with almost anything with enough money coming in. But, I think they often cut deep enough to compromise the long term health of the company, like if you suddenly cut your food budget to almost zero by eating nothing but ramen. In the short term, it's a budget miracle. Keep it up, and you'll die from not getting the vitamins and minerals you need. Before the long term consequences are fully understood and come to pass, they sell they company back off. I'd agree with another comment here. It doesn't even take a declining company, just one small enough to purchase (realistically, you can't buy Apple, it's just too big) with a stable amount of cash coming in. Getting the cash coming in is hard, that takes creativity and creating value, so they need that part in the bag before purchasing the company. But if you have the cash coming in, any fool can just start cutting costs. The stable income also helps with leverage. You can use the company you're buying as security for a loan to by the same company based on the stable income. Ta-da! That's another reason they need companies with cash coming in, leverage so they can flip bigger companies. I'm convinced any idiot with a billion dollars laying around could do it.

tedivm 6y ago

I remember when LimeLight Networks got bought out by PE and their services turned to crap in about six months. It got so bad we got lawyers involved to break our contract with them.

hn_throwaway_99 6y ago

I really wonder about this when it comes to the longer term viability of tech-focused PE firms. The following seem to be absolutely truisms: 1. The second a company is bought out by PE, all the good employees run for the exits. Corporate America isn't exactly known for its empathy and compassion, but working for a PE-owned company means you can be sure the ownership gives 0 shits about anyone working at the company. I have never heard anything but horror stories of those working for PE-owned shops. 2. Given #1, it means the products of said companies always turn to shit pretty fast. This makes me really wonder about how PE firms can really work their financial magic in the long term. Perhaps they're just better at extracting value out of companies that are already declining in the first place, so they just suck the blood dry before they discard of the carcass?

ska 6y ago
re: the latter, the company doesn't have to be declining - although that usually makes it easier to buy. The transaction from the point of view of a PE company is a very different game than say, a product person looking at what could be "done" with a company.
RedShift1 6y ago
That's exactly what they do. Buy when it's good, extract as much money as they can and then sell it on or run it into the ground.
theonemind 6y ago
personally, I think PE works something like: it's easier to cut costs than create value, so they buy something, and cut costs like crazy. It'll work with almost anything with enough money coming in. But, I think they often cut deep enough to compromise the long term health of the company, like if you suddenly cut your food budget to almost zero by eating nothing but ramen. In the short term, it's a budget miracle. Keep it up, and you'll die from not getting the vitamins and minerals you need. Before the long term consequences are fully understood and come to pass, they sell they company back off. I'd agree with another comment here. It doesn't even take a declining company, just one small enough to purchase (realistically, you can't buy Apple, it's just too big) with a stable amount of cash coming in. Getting the cash coming in is hard, that takes creativity and creating value, so they need that part in the bag before purchasing the company. But if you have the cash coming in, any fool can just start cutting costs. The stable income also helps with leverage. You can use the company you're buying as security for a loan to by the same company based on the stable income. Ta-da! That's another reason they need companies with cash coming in, leverage so they can flip bigger companies. I'm convinced any idiot with a billion dollars laying around could do it.