Bloomberg Businessweek - USA (2019-10-07)

◼ FINANCE Bloomberg Businessweek October 7, 2019

29

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