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I would love someone knowledgeable to take examples like this (and counterexamples) and create some discourse on how to defend a company against private equity
by rhizome 6y ago
I would love someone knowledgeable to take examples like this (and counterexamples) and create some discourse on how to defend a company against private equity takeovers.
- coredog64 6y agoPrivate equity firms don’t buy companies that are doing well. So don’t fuck up and you’ll be fine.
- rhizome 6y agoI wouldn't be surprised if PE bros know some "fucking up" entry points that regular people don't, which leave even doing-well companies vulnerable.
- coredog64 6y agoThe business model of PE is to buy distressed assets cheap. You can look at a company’s financials and determine if they are cheap. The magic pixie dust of PE is to look at those financials, the state of the company and the sector, and determine if it’s something that will possibly offer a return. What most people fail to recognize is that when PE is in the picture, the company is already circling the drain. If it was a sure thing to fix, then the company wouldn’t be cheap. Generally speaking, PE doesn’t kill a company: Management did, but PE is the triage doc with bloody hands. They make for a nice comic book villain, but it comes down to “don’t fuck up” There’s another class of PE activity, which is “my company is only mildly fucked but I can’t fix it while answering to shareholders.” So PE helps the owner go private to fix it. Examples are Dell and TIBCO. I don’t care enough about the latter to even look, but I think we can agree that Dell isn’t being stripped by PE bandits.