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How Private Equity destroys companies


eek

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2 hours ago, eek said:

The register has a very interesting reading on  what happened to Maplins https://www.theregister.co.uk/2018/09/26/a_story_of_m_a_failed_retailer/

Basically load it with debt (pocketing the cash yourself) and wait for the inevitable to happen ....

Zugzwang on ToS was always exposing these private equity deals for what they were.Incredible that taxpayers were used to subsidize these deals via Zirp and QE.

 

That's a cracking expose of how it works.

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sleepwello'nights

So who actually lost money? The PE groups who overpaid or the individual investors who funded the PE group? (Ignoring the suppliers who were unpaid creditors at the point of collapse)

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I read that.

Be careful with the claim of gross profit.

They are shops, theyve not put cost of sales in.

My guess, after is theyve be getting less than 10% return in 2000.

The rest of the PE stuff stands though - just junk, debbt abuse.

The sooner the rules on level of debt/tax ofset change, the better.

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reformed nice guy
18 hours ago, sleepwello'nights said:

So who actually lost money? 

Good question. 

If the PE group added on their purchase cost to the debt pile and it gets wound down, does that mean it was 0 cost to them?

 

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19 hours ago, sleepwello'nights said:

So who actually lost money? The PE groups who overpaid or the individual investors who funded the PE group? (Ignoring the suppliers who were unpaid creditors at the point of collapse)

Generally all roads lead back to the creditors that normally include a mixture of bond investors (aka Joe Publics Pension pot) and retail lenders (aka banks subsidized by Joe Public).

 

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