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Are there any examples where a company was purchased via a leveraged buyout and the company went on to be more profitable afterwards? Because the only examples
by ARandumGuy 1y ago
Are there any examples where a company was purchased via a leveraged buyout and the company went on to be more profitable afterwards? Because the only examples I know of resulted in the purchased company going bankrupt fairly quickly.
- deanc 1y agoMany sports teams come to mind. Pretty much any F1 team that exists is now worth a lot more on paper than it was purchased for. A few EPL teams come to mind too.
- tanjtanjtanj 1y agoThose are just buyouts not leveraged buyouts. No EPL team was purchased with an LBO as far as I know.
- nereye 1y ago[1] “ The Glazer family’s acquisition of Manchester United remains controversial to this day. Their £790m takeover in the summer of 2005 came by way of a leveraged buyout: when a significant amount of borrowed money is used to fund the acquisition of a company, with the debt secured against that company itself.” 1 - https://www.independent.co.uk/sport/football/manchester-united-glazers-debt-explained-b2145746.html https://www.independent.co.uk/sport/football/manchester-unit...
- jonas21 1y agoHeinz, Hilton, Dell.
- choilive 1y agoDell did pretty well after going private
- ReptileMan 1y agoBut its buyout was lead by Michael Dell.
- recursive 1y agoWhy "but"?
- pchristensen 1y agoHaving the original founder leading the buyout is not typical. The Dell situation was much more like Steve Jobs returning to Apple than a typical LBO.
- deleted 1y ago[deleted]
- watwut 1y agoBecause the person buying it was interested in the long term health of the company. Most of leveraged buyouts is all about putting debt on the company, selling what you sell and milking it while starving it.
- balderdash 1y agoleverage increases the disparity of returns (so some companies are definitely out of business because the of the leverage put on them) but by far the vast majority of LBO’s are at least moderately successful. This give you some idea of the volume https://www.ropesgray.com/en/insights/alerts/2025/07/us-pe-market-recap https://www.ropesgray.com/en/insights/alerts/2025/07/us-pe-m...
- missedthecue 1y agoHilton's LBO essentially have saved the brand. Twitter is yet an unfolding story but it seems to be working.
- rwmj 1y agoWas Twitter an LBO? I thought the funding came from Musk taking on the debt.
- kchoudhu 1y agoIt's still a leveraged buyout.
- detaro 1y agoA big part of why Twitter needed to cut expenses drastically after the buyout was that it suddenly had an extra >1$ billion of yearly debt repayments to handle.
- watwut 1y agoDid not helped they alienated paying customers (as in companies selling ads) at around the day 2 by literally ignoring them and not providing the service.
- ARandumGuy 1y agoIIRC Musk wanted to get an LBO, but wasn't able to find anyone willing to loan the money. Keep in mind that a LBO is actually a good deal for the bank, because if the purchased company goes bankrupt, the bank can recoup their investment by liquidating the company. However, that only works if there are assets to liquidate. This can include physical assets, valuable IPs, or favorable lease agreements. In other words, anything that someone else would want to purchase. Twitter, being a website, doesn't have a whole lot of assets they could sell. Which meant that other collateral was required for Musk to secure financing.
- nashashmi 1y agoGibson Greeting Cards (1982) by Wesray Capital, Bought for $80M (only $1M in equity), sold for $220M within 18 months Hilton Hotels (2007) by Blackstone Group, Despite the 2008 crisis, refinanced and sold with a $14B profit Safeway (1986) by Kohlberg Kravis Roberts, Restructured, sold underperforming stores, returned to profitability HCA Healthcare (2006) by KKR & Bain Capital, Strong cash flow supported debt; remained stable and profitable Dell Technologies (2013), Silver Lake Partners, Went private, streamlined operations, and rebounded strongly RJR Nabisco (1989) by Kohlberg Kravis Roberts Iconic LBO; despite controversy, generated $53M profit
- stogot 1y agoSo 50/50 odds on completely destroying the company (and jobs) or generating some minor wealth for a handful of investors?
- nashashmi 1y agoImagine if PE took over Circuit City
- Invictus0 1y agoTry to think clearly for a second. Why would there be a trillion dollar PE ecosystem if this always completely destroyed the company?
- mlinhares 1y agoBecause the goal is short term profit, not long term business success. It makes absolutely no difference if the company survives the process or not, what matters is that the PE firms extract their money from the process.
- Invictus0 1y agoI think if you actually reflect on the matter you would realize that PE firms need to be able to sell the business in order to make money, and that they do in fact sell the business for a profit in the majority of cases. The extremely rare cases of yore where you could buy a business for less than the value of its assets and simply sell off the assets and leave the carcass for bankruptcy are long gone.