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They “sell” stuff to closely held entities and then lease them back. The principals take a vig from everything. It’s not always an objective for the target com
by Spooky23 2y ago
They “sell” stuff to closely held entities and then lease them back. The principals take a vig from everything.
It’s not always an objective for the target company to go bankrupt, but if they do, the management has already pulled their money out. A company I worked for was a cash cow used to borrow and buy 3 other companies. The combined entity grew due to some growth hack stuff and one-shots, then got acquired. The PE boys made a lot of money, and the company itself was pretty much toast after the second acquisition.
- hack_fraud13 2y agoThanks I appreciate the clarification. You're referring to a leaseback, right? From the research I've done, I've mostly seen it happen in the context of real estate, e.g. with Darden when Starboard Value took over [0]. I think the rebuttals to management on slide 38. What I wonder about this is in cases where the real estate is spun off into a REIT, does the original company keep shares in the REIT, or are transactions like this purely for one-time raising capital? [0]https://www.sec.gov/Archives/edgar/data/940944/000092189514000700/ex991dfan14a206297125_033114.pdf https://www.sec.gov/Archives/edgar/data/940944/0000921895140...