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I’ve literally never seen that happen. what does always happen is cutting ‘non essentials’ that are essential until the company implodes.
by lazide 12d ago
I’ve literally never seen that happen. what does always happen is cutting ‘non essentials’ that are essential until the company implodes.
- ironSkillet 12d agoThat is one of the core strategies in the private equity playbook.
- 0xDEAFBEAD 12d agoWhy would it be profitable for the company they just paid a lot of money to acquire to implode?
- TylerE 12d agoThey sell off everything of value before it implodes and cash out. THEN they let it implode with nothing but the debt remaining.
- 0xDEAFBEAD 12d agoWhy would banks lend to such an enterprise if they don't expect to get paid back?
- TylerE 12d agoThey don't. They lend to the target company BEFORE the buyout.
- lazide 12d agothey usually get the company to take out the debt to actually be acquired. it’s the key first step. then they extract as much cash as possible while the debt ballons. so called ‘extracting brand value’. the investors usually do quite well
- afavour 12d agoI suspect there’s a survival bias at work here. The PE purchased companies that continued to thrive are ones you probably never even knew got bought out.
- lazide 12d agocites?
- alex43578 12d agoHilton Hotels, Dell, Burger King, Dunkin Donuts? Google works if you use it.
- lazide 12d agoI guess not everything is a Sears, K-Mart, LastPass, HCR/Carlyle, etc, etc. [https://www.congress.gov/119/meeting/house/118337/documents/HHRG-119-SM27-20250605-SD004.pdf https://www.congress.gov/119/meeting/house/118337/documents/...].
- AngryData 12d agoThose are certainly some... examples. Not things I would hold up as a sign that PE is a good thing since all those businesses look like they are perpetually on the edge of collapse around my area. Dilapidated, mostly empty parking lots, poor service from understaffing. I think we would all be better off if those businesses died and left room for others to replace them.