Bloomberg Businessweek Europe - 07.10.2019

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◼ FINANCE Bloomberg Businessweek October 7, 2019

29

private from 1980 to 2006. It followed both the LBOs
and a similar number of companies that stayed public
for a period of 10 years. They found about 20% of the
PE-owned companies filed for bankruptcy—10 times
the rate of those that stayed public. Pile on debt, and
employees lose, Ayash says. “The community loses.
The government loses because it has to support the
employees.” Who wins? “The funds do.”
Research by Eileen Appelbaum, co-director of
the Center for Economic and Policy Research, says
the problem isn’t leverage per se but too much of it.
She points to guidance issued by the Federal Deposit
Insurance Corp. in 2013 saying debt levels of more
than six times earnings before interest, taxes, depre-
ciation, and amortization, or Ebitda, “raises con-
cerns for most industries.” If that’s the case, plenty
of upheaval lies ahead. A 2018 McKinsey report shows
that multiples for median private equity Ebitda ticked
up to more than 10 in 2017, from 9.2 the previous year.
Of course, by the time private equity acquires some

of these companies, they’re already in deep trouble.
Defenders say PE fills a crucial role in the market.
The firms have the resources and expertise to turn
companies around and an incentive to invest in them
to make sure there’s a healthy gain when they sell or
take them public, says Derek Pitts, head of restruc-
turing at investment bank PJ Solomon. “You have to
make investments to grow a smaller company,” he
says, and some require the kind of check that only
a major PE shop can write. Being shielded from the
quarter-by-quarter glare of public reporting require-
ments may allow PE companies to experiment and
focus on more than short-term results.
The retail industry was long a prime target for buy-
outs because of its reliable cash flow and the value of
the real estate it owned. But the sector is no longer
as suited to PE ownership amid ever-changing cus-
tomer whims and the massive upheaval brought by
Amazon, says Perry Mandarino, head of restructur-
ing and co-head of investment banking at B.Riley

2011 2014 2018

st
n

World Parks & Entertainment

A

ICE Data Services

Healthscope

Gates Worldwide

MultiPlan

Extended Stay America

Nature's Bounty

Burger King Holdings

Worldpay

Sunrise Communications Group

HS1

CommScope

J.Crew Group

Syniverse Holdings

Del Monte Foods

Cia Española de Petróleos

Acosta Sales & Marketing
Envision Healthcare

Polkomtel

BJ’s Wholesale Club

Husky Injection Molding Systems

Capsugel

Securitas Direct

SPIE

Com Hem

Kinetic Concepts

Change Healthcare Holdings
Festival Walk
MTL Publishing

Skylark

Pharmaceutical Pr uct Development

Vattenfall businesses

Samson Investment

Ahlsell

EP Energy Global

TransUnion Intermediate Holdings

Finastra Group Holdings

BSN Medical International Holding

Getty Images

Focus Media Holding

United Technologies businesses

Cebridge Acquisition

Vivint

Axalta Coating Systems

USI Holdings

McGraw-Hill Education

Annington Homes

Do glas Holding

Net4Gas

Gardner Denver

Kraft Heinz Foods

Dell

Springer Nature Three

Petrobras Oil & Gas

BMC Software

Neiman Marcus Group

HUB International

Fortum distribution business

Jones Group

Coastal Energy

Auto Trader Holding

Nets Holding

Ortho-Clinical Diagnostics

Darden Financing I

Gates

Tibco Software

Compuware

Riverbed Technology

PetSmart

Canary Wharf Group Investment Holdings

Cleco Corporate Holdings

Life Time

Ellevio

ITR Concession
Blue Coat Systems

Home Properties

Qihoo 360 Technology
Depobank - Banca Depositaria Italiana

Douglas Holding

Verallia

Informatica
WuXi PharmaTech Cayman

Cablevision Systems

Strategic Hotels & Resorts

Solera Holdings

Belk

Homeplus

LeasePlan

Sirius International Insurance Group

Veritas Software

TransGrid
Keurig Green Mountain

Skyway Concession
Petco Animal Supplies

BioMed Realty Trust
SolarWinds North America

MedAssets

ADT Security
Pacific National Holdings

Qlik Technologies

ExamWorks Group
Lexmark International

Talen Energy

Grande Communications Networks and RCN Telecom Services

Press Ganey Holdings

Playtika

Rackspace Hosting

Acrisure

Allegro Group

Atotech

Calsonic Kansei

TeamHealth Holdings

DH

Yingde Gases Gro p

Milestone Apartme ts Real Estate Investment Trust

McDonald’s China Management

USI Holdings
Diversey Holdings

Air Methods

Parexel International

Q-Park

Staples

Holland & Barrett Holdings

Core & Main

Belle International Holdings

Hitachi Kokusa Electric

Kennedy Wilson Europe Real Estate

EagleClaw Midstream Ventures

Panera Bread

West

American Medical Response

Paysafe Group

GLP
ClubCorp Holdings

Monogram Residential Trust

Nets

Toshiba Memory

Calpine

Husky Injection Molding Systems

TMF Group

Refresco Group
Nre Operations

OHL Concesiones

Kindred Healthcare

Aspen Insurance Holdings

SUSE business

EI Towers
Forest City Realty Trust
Dun & Bradstreet

TDC

Nuovo Trasporto Viaggiatori

Ply Gem Holdings

ProMach

Pure Industrial Real Estate Trust

Bl ckhawk Network Holdings

LifeScan

Web.com Group

Envision Healthcare

EnLink Midstream

Siren Holdings Korea

ZPG

Hispania Activos Inmobiliarios

Verifone Systems

Financial Engines

Gramercy Property Trust

Sanofi Foreign Participations

Athenahealth

Amer Sports

Travelport Worldwide

Ahlsell

Cadent Gas

Ultimate Software Group

Ellie Mae

Multi-Color

IFCO Systems

Legacy Hotels Real Estate Investment Trust


Warren Buffett teamed with
3G to nab H.J. Heinz, which
later merged with Kraft

KKR acquired Envision, which
owns a national doctors’
practice, for almost $10 billion

DATA: COMPILED BY BLOOMBERG. COMPANIES MAY LATER HAVE BEEN SOLD OR TAKEN PUBLIC; NAMES MAY HAVE BEEN DIFFERENT AT THE TIME OF THE DEAL
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