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spunko

Death by Private equity list

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So few people understand what it is and that allows them to get away with it. Blaming the internet alone doesn't cut it, nor does changing habits the commonly rolled out excuse... 

 East Clothing (went into administration last year) perfectly encapsulates this. The business blamed its collapse on the fact that shoppers were ‘reining in spending’ and that ‘high street footfall had plummeted’ but according to the ONS, retail spend in specialist fashion stores haa grown by about 4% this year so far – in fact, East itself posted a 6.5% uplift in like-for-like sales before it went under. Clearly, we are being lied to. 

All of these have gone or will likely go the way of the dodo due to private equity or venture capital. 

 

House of Fraser 

Evans Cycles

B h s 

Maplin 

Debenhams (ish)

East

Toys R Us

Phones 4u 

Bernard Matthews

New Look

byron burgers

Jessops 

Carpetright

Mothercare

MFI 

Comet 

Jamie's Italian

Prezzo 

I'll update it with more tomorrow. Next one to go must surely be Fat Face also PE owned. 

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I thought Bernard Matthews was owned by the Two Sisters group? I do hope they are included in the downfall list :-)

Evans Cycles I find upsetting - fantastic family business back in the early 90’s.

Edit: Misread, Two Sisters brought the business afterwards and then screwed over the staffs pensions.

Edited by OurDayWillCome

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2 minutes ago, OurDayWillCome said:

I thought Bernard Matthews was owned by the Two Sisters group? I do hope they are included in the downfall list :-)

Evans Cycles I find upsetting - fantastic family business back in the early 90’s.

It was sold to 2 sisters after being, erm mismanaged by PE. 

https://www.ft.com/content/f9126af2-2051-11e7-a454-ab04428977f9

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It's a cycle, that is natural, well almost. But stretched out longer due to long term low interest rates. It is painful how long companies now limp along on life support.

 

Market Opening/Opportunity ---> Family start up ---> Goes National ---> Goes Public ---> Goes Private ---> Asset Stripped ---> Company Dies ---> Back to the Start

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Hard to categorise what counts as the PE sector in current form as PE.

Bt like hedge funds. These are anything but hedge - very leveraged fund funds, Yes. Hedge No.

PE, how it used to exist, still exists - private fund buys out/takes over a business and refreshes it. This seems to happen in small to medium businesses. Even then, its pretty painful - bit like being chopped up and made into a pie. It tends to be most successful when a company has been owned by a single person/family and its just spent too much on management and management pet businesses.

In your list I can see:

Pure assets strippers - Debenhams. Bought out, all the shops sold off, loaded up with debnt and flipped back o nthe stock exhange. *NEVER TOUCH THESE COMPANIES AS AN INVESTMENT. Total junk. Needs banning/gutting. Debenhams is why none of the Pe operatos of 10 years ago have an easy deal flipping crap onto the stock exchange.

BHS Green th cunt on this too.

 

Income chasers/leveraged debt. Oh Ive a spiffing idea. X gives a guaranteed return of xx. Lets lbuy it, load it up with debt and take the tax advantages. What could go wrong? Care homes, Guy Hands, New Look

 

Buy low and ? - Business fails, share price drops. When if it was worth x x 100, then if I buy it for x there must be some value. Failing business are like falling knives. The equity gets burned up quickly. And hey are normally failing for a reason. Jessops, Bernahd matthews,

 

Lets raise some money and start a business. These are pretty new. Rather than hanging around waiting for business to buy, PE had loads of money floating around, needing to invest. These scout round for a concept - a small, successful busines -Byron burgers, Bills. Or get pitched by a new concept - jamies Italians. These are almost always pizza burger Brake Bros eateries. Theres lot of empty shops that can be easily converted, youve got 2 years free/low rent, youve tax credits taking care of the labour costs. These fall over when theres a change - min wage icnrease, tax creits cut, EE go home, low rent period ends.

 

 

 

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1 hour ago, 201p said:

It's a cycle, that is natural, well almost. But stretched out longer due to long term low interest rates. It is painful how long companies now limp along on life support.

 

Market Opening/Opportunity ---> Family start up ---> Goes National ---> Goes Public ---> Goes Private ---> Asset Stripped ---> Company Dies ---> Back to the Start

i prefer the simpler unicorn method;

image.png.d617c5e21024c118a12cff25ef72aa92.png

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12 minutes ago, NTB said:

Don't be a tease. Elaborate please?

It's often a front to pump funny money into too big to fail, or it's not the right time for them to fail, entities. Retail is very public facing which is why it sees so much PE activity.

Amusingly a lot of the well paid Oxbridge graduates in the PE funds really believe they crunched the numbers and put together a compelling case to lenders when in reality someone much higher up the food chain green lighted the lending.

They're part of the machinery of 'managed decline' which has been a thing since Thatcher's days.

Edited by SNACR

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2 hours ago, 201p said:

It's a cycle, that is natural, well almost. But stretched out longer due to long term low interest rates. It is painful how long companies now limp along on life support.

 

Market Opening/Opportunity ---> Family start up ---> Goes National ---> Goes Public ---> Goes Private ---> Asset Stripped ---> Company Dies ---> Back to the Start

Yes  n No.

The finance sector has become grossly out of size to the economy.

This is finiacilisation that people keep banging on about.

Rather than have fince serve the economoy its got so big tht finance is leachy off the economy.

Getting rid of tax relief on debt is on the steps to end this.

 

 

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So, what is going on with John Lewis and their massive fall in profits? I always thought that they had a unique ownership structure in that each worker had a stake in the company?

To be honest, I think people just don't have much money these days and nobody is buying expensive furniture because they have no space and no permanent home. It's also too expensive to have a high street shop once you factor in rates, taxes etc all whilst the big companies are able to (legally with the help of the Government turning a blind eye) avoid as much tax as possible which other companies can't.

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3 hours ago, Game_of_Homes said:

So, what is going on with John Lewis and their massive fall in profits? I always thought that they had a unique ownership structure in that each worker had a stake in the company?

To be honest, I think people just don't have much money these days and nobody is buying expensive furniture because they have no space and no permanent home. It's also too expensive to have a high street shop once you factor in rates, taxes etc all whilst the big companies are able to (legally with the help of the Government turning a blind eye) avoid as much tax as possible which other companies can't.

T fall is in profit not in revenue - theyve been spendign a lot expanding.

 

Why should a worker having a stake i nth company prevent it the CEO/board doing stupid stuff?

You might want to look atthe COOP for another example.

 

 

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43 minutes ago, Horrified Onlooker said:

The parent company of my workplace has received an offer of a buyout from a PE company. Unfortunately many of the colleagues with shares can only see the cash benefit of the offer. I think my CV will need updating soon...

I certainly wouldn't assume that it would necessarily be any worse for job security than a trade buyer.

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On 20/09/2018 at 23:48, spunko said:

So few people understand what it is and that allows them to get away with it. Blaming the internet alone doesn't cut it, nor does changing habits the commonly rolled out excuse... 

 East Clothing (went into administration last year) perfectly encapsulates this. The business blamed its collapse on the fact that shoppers were ‘reining in spending’ and that ‘high street footfall had plummeted’ but according to the ONS, retail spend in specialist fashion stores haa grown by about 4% this year so far – in fact, East itself posted a 6.5% uplift in like-for-like sales before it went under. Clearly, we are being lied to. 

All of these have gone or will likely go the way of the dodo due to private equity or venture capital. 

 

House of Fraser 

Evans Cycles

B h s 

Maplin 

Debenhams (ish)

East

Toys R Us

Phones 4u 

Bernard Matthews

New Look

byron burgers

Jessops 

Carpetright

Mothercare

MFI 

Comet 

Jamie's Italian

Prezzo 

I'll update it with more tomorrow. Next one to go must surely be Fat Face also PE owned. 

Debenhams teetering at 9p...just the last 100 million  market cap to go,  now trading on a fwd price to earnings of three. No pension deficit, unlike BHS, just stuck with expensive leases.

I do hope it pulls through for the sake of the staff, respect for the brand and nostalgia. 

Edited by crashmonitor

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Funny, a relative's outfit may be going the PE way.  So I did a bit of research, all the way to a fund registered in some Caribbean tax haven!  Shutters up!  Would love to take a peek inside! 

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19 minutes ago, Harley said:

Funny, a relative's outfit may be going the PE way.  So I did a bit of research, all the way to a fund registered in some Caribbean tax haven!  Shutters up!  Would love to take a peek inside! 

Follow the sequence -- it's likely to be good for a year or two, acceptable for another year or two and then disaster -- they should make a 3 year plan of it.

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33 minutes ago, dgul said:

Follow the sequence -- it's likely to be good for a year or two, acceptable for another year or two and then disaster -- they should make a 3 year plan of it.

A PE recipe for success:

1. Make a convincing "story" using your PR buddies

2. Suck out all the assets and replace with tax deductable debt

3. Sell to a bigger fool or blame the business environment, Brexit, etc

The PE survivor:  Get some golden handcuffs and/or suck like f*ck and join the PE Borg on their next venture.

They used to call it asset stripping in the old days.

Edited by Harley

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