◼ FINANCE Bloomberg Businessweek October 7, 2019
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privatefrom 1980 to2006.It followedboththeLBOs
andasimilarnumberofcompaniesthatstayedpublic
fora periodof 10 years.Theyfoundabout20%ofthe
PE-ownedcompaniesfiledforbankruptcy—10times
therateofthosethatstayedpublic.Pileondebt,and
employeeslose,Ayashsays.“Thecommunityloses.
Thegovernmentlosesbecauseit hastosupportthe
employees.”Whowins?“Thefundsdo.”
ResearchbyEileenAppelbaum,co-directorof
theCenterforEconomicandPolicyResearch,says
theproblemisn’tleverageperse but too muchofit.
She points to guidance issued by the FederalDeposit
Insurance Corp. in 2013 saying debt levelsofmore
than six times earnings before interest, taxes,depre-
ciation, and amortization, or Ebitda, “raisescon-
cerns for most industries.” If that’s the case,plenty
of upheaval lies ahead. A 2018 McKinsey reportshows
that multiples for median private equity Ebitdaticked
up to more than 10 in 2017, from 9.2 the previousyear.
Of course, by the time private equity acquiressome
ofthesecompanies,they’realreadyindeeptrouble.
DefenderssayPEfillsa crucialroleinthemarket.
Thefirmshavetheresourcesandexpertisetoturn
companiesaroundandanincentivetoinvestinthem
tomakesurethere’sa healthygainwhentheysellor
takethempublic,saysDerekPitts,headofrestruc-
turingatinvestmentbankPJSolomon.“Youhaveto
makeinvestmentstogrowa smallercompany,”he
says,andsomerequirethekindofcheckthatonly
a majorPEshopcanwrite.Beingshieldedfromthe
quarter-by-quarterglareofpublicreportingrequire-
mentsmayallowPEcompaniestoexperimentand
focusonmorethanshort-termresults.
Theretailindustrywaslonga primetargetforbuy-
outsbecauseofitsreliablecashflowandthevalueof
therealestateit owned.Butthesectoris nolonger
assuitedtoPEownershipamidever-changingcus-
tomerwhimsandthemassiveupheavalbroughtby
Amazon,saysPerryMandarino,headofrestructur-
ingandco-headofinvestmentbankingatB.Riley
2011 2014 2018
st
n
WorldParks& 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 MoldingSystems
Capsugel
Securitas Direct
SPIE
Com Hem
Kinetic Concepts
Change Healthcare Holdings
Festival Walk
MTL Publishing
Skylark
PharmaceuticalPr uctDevelopment
Vattenfall businesses
Samson Investment
Ahlsell
EP Energy Global
TransUnion IntermediateHoldings
Finastra GroupHoldings
BSN MedicalInternationalHolding
GettyImages
FocusMediaHolding
UnitedTechnologiesbusinesses
CebridgeAcquisition
Vivint
AxaltaCoatingSystems
USIHoldings
McGraw-HillEducation
AnningtonHomes
DoglasHolding
Net4Gas
GardnerDenver
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 CommunicationsNetworksandRCNTelecomServices
Press Ganey Holdings
Playtika
Rackspace Hosting
Acrisure
Allegro Group
Atotech
Calsonic Kansei
TeamHealth Holdings
DH
Yingde Gases Grop
Milestone ApartmetsRealEstateInvestmentTrust
McDonald’s ChinaManagement
USI Holdings
Diversey Holdings
Air Methods
Parexel International
Q-Park
Staples
Holland & BarrettHoldings
Core & Main
Belle InternationalHoldings
Hitachi KokusaElectric
Kennedy WilsonEuropeRealEstate
EagleClaw MidstreamVentures
Panera Bread
West
AmericanMedicalResponse
PaysafeGroup
GLP
ClubCorpHoldings
MonogramResidentialTrust
Nets
ToshibaMemory
Calpine
HuskyInjectionMoldingSystems
TMFGroup
RefrescoGroup
NreOperations
OHLConcesiones
KindredHealthcare
AspenInsuranceHoldings
SUSEbusiness
EITowers
ForestCityRealtyTrust
Dun& Bradstreet
TDC
NuovoTrasportoViaggiatori
PlyGemHoldings
ProMach
PureIndustrialRealEstateTrust
BlckhawkNetworkHoldings
LifeScan
Web.comGroup
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$10billion
DATA: COMPILED BY BLOOMBERG. COMPANIES MAY LATER HAVE BEEN SOLD OR TAKEN PUBLIC; NAMES MAY HAVE BEEN DIFFERENT AT THE TIME OF THE DEAL