◼ FINANCE Bloomberg Businessweek October 7, 2019
28
PE firm Sun Capital Partners Inc. in a 2005 LBO.
“When they took over, our payroll got drastically
cut, our retirement plan got cut, and we saw a lot of
turnover among executives,” she says.
One of Sun Capital’s first moves as owner was to
monetize Shopko’s most valuable asset, its real estate,
by selling it for about $800 million and leasing back
the space to its stores. That generated a short-term
windfall but added to Shopko’s long-term rent costs.
“A lot of stores that were once profitable started to
show lower profits because they had to start paying
rent,” Van Beckum says.
In 2019, Shopko said it could no longer service its
debt and filed for bankruptcy, ultimately shuttering
all of its more than 360 stores. Van Beckum was asked
to stay on as a manager during her store’s liquidation
and was promised severance and a closing bonus in
return, she says. Weeks later, she received an email
telling her that her severance claim wouldn’t be paid.
Sun Capital has said money has been contributed to
the bankruptcy plan that can pay such claims.
Private equity and hedge funds gained control of
more than 80 retailers in the past decade, accord-
ing to a July report by a group of progressive orga-
nizations including Americans for Financial Reform
and United for Respect. And PE-owned merchants
account for most of the biggest recent retail bank-
ruptcies, including those of Gymboree, Payless, and
Shopko in the past year alone. Those bankruptcies
wiped out 1.3 million jobs—including positions at retail-
ers and related jobs, such as at vendors—according
to the report, which estimates that “Wall Street firms
have destroyed eight times as many retail jobs as they
have created in the past decade.”
Whether LBOs perform poorly because of debt,
business strategy, or competition from Amazon
.com Inc., research shows they fare worse than their
public counterparts. A July paper by Brian Ayash
and Mahdi Rastad of California Polytechnic State
University examined almost 500 companies taken
1999 2004 2008
A Crushing Tide of Megadeals
Around 2007, private equity buyouts of
more than $2 billion got so numerous
that we can hardly fit them on the page.
The financial crisis interrupted the flow,
but only temporarily. Here’s a look at two
decades of deals. ——Tom Maloney
Zeneca Specialties
United Biscuits
MascoTech
Veba Electronics
Hibu
Eircom
Cognis Deutschland
Unique Pub Finance
ZF TRW Automotive Holdings
Smurfit Kappa
Sydney Airport
SoftBank Telecom
Ondeo Nalco
Debenhams
S&N Retail
CGX Energy
Warner Music Group
Extended Stay America
UGS
Panamasat
GSW Immobilien
LNR Property
Automobile Association
Metro-Goldwyn-Mayer
Boise Cascade
Truvo Luxembourg
Intelsat Investments
NHP
Saga
Masonite International
Select Medical
Maxeda
Chilcott UK
FIS Data Systems
Insight Communications
Amadeus Global Travel Distribution
Toys “R” Us
Wyndham International
InterGen Investors
Neiman Marcus Group
Viterra
Bluestem Group
Avago Technologies
Hertz
La Quinta
Somerfield
TDC
Suntory Beverage & Food Europe
Dunkin’ Brands
Woba Dresden
MeriStar Hospitalit
Dubai Aerosp ce Enter i
AWAS Aviatio Capital Designated Activity
Albertsons
Fairmont Hote s & Resorts
Sensata Technologies
LHR Airports
Nielsen
Education Management
CarrAmerica Realty
Associated British Ports Holdings
Kerzner International
Trizec Properties
West
Kinder Mo gan Kansas
ARAMARK
SSP Group
General Healthcare Group
Gambro
Travelport
Michaels Stores
Berry Global Group
Univision Communications
Old AII
Caudwell Group
Kabelcom
Solocal Group
Casema
HCA
Duquesne Light Holdings
Momentive Performance Materials
NXP USA
Capio Group Services
Four Seasons Health Care
Intrawest
IHeartCommunications
Four Seasons Holdings
OSI Restaurant Partners
Solocal Group
AWG Parent
E ergia Group NI Holdings
Caesars Entertainment
Biomet
Realogy Group
Adesa
Beechcraft
BAWAG PSK Bank fuer Arbeit und Wirtschaft und Oe
Sabre Holdings
Equity Office Properties Trust
Trusted Media Brands
e Ashikaga Bank
Gavilon Group
Biffa
CHC Helicopter
Angel Trains
Expro International Group
ConvaTec
Weather Group Televisio
Xella International
SeaWorld Parks & Entertainment
IQVIA
CBR Service
Pinnacle Foods Group
Edgars Consolidated Stores
Laureate Education
Catalent Pharma Solutions
Molnlycke Health Care
Alliance Atlantis Communications
ServiceMaster
Spirit Finance
ista International
Claire’s Stores
Dresser
Dollar General
Alliance Boots Holdings
Avaya
Hugo Boss
Ceridian
Valentino Fashion Group
EMI Group
CDW
Bausch & Lomb
Alltel
US Foods
VWR International
Actavis Group
Pegasus Aviation Finance
First Data
Tribune
Tervita
Allison Transmission Holdings
Brake Bros
The Automobile Association and Saga
Guitar Center
Scandlines
Nuveen Investments
Spire Healthcare
HD Supply
Applus Servicios Tecnologicos
Elis
Univar
Sequa
Legacy Hotels Real Estate Investment Trust
Williams Scotsman International
Manor Care
Park Hotels & Resorts
Puget Energy
Kelda Group
Abbot Group
Ascential Group
Goodman Global
Arysta LifeScience
Energy Future Holdings
The $48 billion buyout of TXU
remains the biggest ever;
renamed Energy Future Holdings,
the utility went bankrupt in 2014
The fall of Bear
Stearns marks
the start of the
financial crisis
Dunkin’ went public
in 2012, earning a
fat profit for its PE
owners