◼ FINANCE Bloomberg Businessweek October 7, 2019
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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