521–530 of 540 posts
So GG Capital paid $2.1B for Red Lobster, and sold the land for $1.5B. They still owe $600M on their purchase! Did they sell the remnants to Thai Union for > $600M? Only then this whole thing makes sense.
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> PE isn't an exotic business philosophy. It is literally just a private buyer. With a complex tax-favorable structure, https://www.ropesgray.com/en/insights/alerts/2019/02/tax-iss...
Great read! The 6 layers of corporations with different functions was fascinating.
Private equity firm wants to buy Red Lobster, but they don't have enough money. So to afford the sale, they make a deal to sell the land every Red Lobster sits on to a firm that will charge Red Lobster above-market rate rent to stay in business. This doesn't seem like it should be legal.
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Because, contrary to public belief, PE firms are skilled and sophisticated managers. Most deals are successful under their management, and this is why banks usually lend 70-90% of the purchase funds. They specifically target companies that are undervalued, in distress, and can be turned around or liquidated for more than the cost. PE isn't an exotic business philosophy. It is literally just a private buyer.
"Most deals are successful under their management" Although often to the detriment of customers as I have seen with several vets and my former dentist. Prices suddenly doubled and tripled or even more.
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"Most deals are successful under their management" Although often to the detriment of customers as I have seen with several vets and my former dentist. Prices suddenly doubled and tripled or even more.
I'm not sure those vet deals are profitable yet. A lot of the deals in the last 10 years will be looking for their exit soon and I'm not sure there are buyers.
I have the same question every time I see one of these articles. I think I've even posted the question in previous HN threads on private equity shenanigans. The question is: Why is this profitable? If the land is worth $1.5 billion, it should have cost PE more than $1.5 billion to buy the company. Then there would be no way to make a profit by selling the land, paying yourself, and letting the company go belly-up. Wh…
I thought the PE model was to buy one of these companies, leverage them with many multiples of debt while paying themselves out massive fees and bonuses, then letting the huge interest and debt load take its toll on the husk of the company.
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I'm not sure those vet deals are profitable yet. A lot of the deals in the last 10 years will be looking for their exit soon and I'm not sure there are buyers.
Interesting. I always wonder why vets don't just jump ship and start their own clinics.
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Interesting. I always wonder why vets don't just jump ship and start their own clinics.
I’m an ophthalmologist. The answer is that junior partners are brought on at a below-market-rate salary with the promise of future equity (usually under false pretenses) in the practice and a super restrictive non-compete agreement. The senior partners then take their golden parachute and sell-out the field and the junior partners to the PE finance bros. One then has to choose between selling their house, uprooting t…
Earlier quoted context omitted.
Interesting. I always wonder why vets don't just jump ship and start their own clinics.
I’m an ophthalmologist. The answer is that junior partners are brought on at a below-market-rate salary with the promise of future equity (usually under false pretenses) in the practice and a super restrictive non-compete agreement. The senior partners then take their golden parachute and sell-out the field and the junior partners to the PE finance bros. One then has to choose between selling their house, uprooting t…