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How is the nation's biggest grocery store being identified as a PE target ? It isn't a growth business. It isn't underperming expectations. It doesn't have exp
by screye 2y ago
How is the nation's biggest grocery store being identified as a PE target ?
It isn't a growth business. It isn't underperming expectations. It doesn't have expansion opportunities. Brick and mortar is already struggling and behemoths like Amazon and Walmart are in a leading position in online sales.
It's a head scratching decision. I would love to be a fly on the wall when such proposals are made.
- mrguyorama 2y agoBecause it's trivial to take an existing healthy business and extract value from it? Literally cannibalizing a business is a way to make money. The group that killed Sears for example knew what they were doing, and got very wealthy doing it. As long as there is a nonzero switching cost for any business relationship, it is profitable to take over that business and milk that switching cost for pure profit. Switching costs go up non-linearly as your market approaches monopoly or duopoly.