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In this case the PE firm would have been better off not getting a loan to begin with - it would have kept the interest payments to itself. This looks a lot lik
by dh2022 2y ago
In this case the PE firm would have been better off not getting a loan to begin with - it would have kept the interest payments to itself.
This looks a lot like selling some bad assets to some sucker investors. But the question a lot of people seem to ask in this thread is: when will the world run out of suckers? (Maybe this question shows how naive I am? Maybe some people know how to find these suckers one after the other?)
- lazide 2y agoThere are a lot of suckers, including: - Folks trying to ‘get a better retirement’ by buying riskier products. - folks targeted by Wolf of Wallstreet types (or their more ethical brethren) - folks trying to ‘get rich quick’ - folks trying to ‘double or nothing’ after a bad decision. Etc, etc. ‘There is a sucker born every minute’ and all.
- antasvara 2y ago>In this case the PE firm would have been better off not getting a loan to begin with - it would have kept the interest payments to itself. That assumes the PE company can predict exactly how long the expect the business to survive after takeover. They can't. Both sides (the lender and the PE firm) are evaluating the company being purchased and the plan set out by the PE firm. The loan terms are set such that both sides feel they can make money on the deal. The fact that PE doesn't make money on every deal indicates that they can be wrong.