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Would it have gone private if it was such a great business at this moment ? Squarespece looked like a fairly competent company, even as they were perhaps overs

Would it have gone private if it was such a great business at this moment ? Squarespece looked like a fairly competent company, even as they were perhaps overspending on advertisement. Their competitors don't seem to be doing that much better except for Automattic perhaps.

sroussey 2y ago
Yes. Private equity likes cash making business machines.
- rchaud 2y ago
  Like Sears and Hertz?
  - dehrmann 2y ago
    There are different strategies. You can buy up dying companies and try to turn them around with management changes (and debt), you can sell off companies for scrap, you can buy up money printing machines and run them hotter.
    - lotsofpulp 2y ago
      Just to show that these bets are not without risk, the Sears bet failed bigtime. Lampert lost a ton of money.
      - dehrmann 2y ago
        People love to vilify PE for destroying companies, but a lot of these companies were dying anyway, and PE was trying a last-ditch, high-risk reorg to save them.
  - mywittyname 2y ago
    It's still possible to make money in this situation. Buy a company, then have it buy itself back using debt. The PE firm gets most of its initial capital investment back then secures a revenue stream in the form of management fees. The company can still go bankrupt, but as long as it sticks around long enough to pay back enough to the parent company that it turned a profit, things worked out. The bond holders can fight over the scraps post-bankruptcy.
- dexwiz 2y ago
  The bet is they make money now, but could be trimmed and squeezed to make even more.
- michaelt 2y ago
  Ah, but stock market investors also like cash making business machines. If private equity is able to outbid the stock market, they must have spotted a way they can extract more value. Sometimes that's by raiding the pension fund and cranking up prices. Other times it's a distressed business and better management can turn it around. Neither is exactly good news for customers.
  - lokar 2y ago
    The market care more about growth

sroussey 2y ago

Yes. Private equity likes cash making business machines.

rchaud 2y ago
Like Sears and Hertz?
- dehrmann 2y ago
  There are different strategies. You can buy up dying companies and try to turn them around with management changes (and debt), you can sell off companies for scrap, you can buy up money printing machines and run them hotter.
  - lotsofpulp 2y ago
    Just to show that these bets are not without risk, the Sears bet failed bigtime. Lampert lost a ton of money.
    - dehrmann 2y ago
      People love to vilify PE for destroying companies, but a lot of these companies were dying anyway, and PE was trying a last-ditch, high-risk reorg to save them.
- mywittyname 2y ago
  It's still possible to make money in this situation. Buy a company, then have it buy itself back using debt. The PE firm gets most of its initial capital investment back then secures a revenue stream in the form of management fees. The company can still go bankrupt, but as long as it sticks around long enough to pay back enough to the parent company that it turned a profit, things worked out. The bond holders can fight over the scraps post-bankruptcy.
dexwiz 2y ago
The bet is they make money now, but could be trimmed and squeezed to make even more.
michaelt 2y ago
Ah, but stock market investors also like cash making business machines. If private equity is able to outbid the stock market, they must have spotted a way they can extract more value. Sometimes that's by raiding the pension fund and cranking up prices. Other times it's a distressed business and better management can turn it around. Neither is exactly good news for customers.
- lokar 2y ago
  The market care more about growth