Re:You Can Thank Private Equity for That Enormous Doctor's Bill
by toomuchtodo on Thursday May 30, 2024 @09:52AM
(#40523736)
It does happen to restaurants: red lobster is the most recent example. PE raised the rent on the ground leases to where it was no longer sustainable for the operators of the eatery.
> When a private-equity firm bought the iconic seafood chain in 2014, it sold the real estate under the restaurants for $1.5 billion. Then the restaurants struggled to pay the rents.
> In recent years, private-equity firms have invested heavily in all areas of industry, including retailers, restaurants, media and health care. Some 12 million workers are employed by private equity-backed firms, or 7% of the workforce. Companies bought out and indebted by private equity go bankrupt 10 times more often than companies not purchased by these firms, academic research shows. In a report this month, Moody’s Ratings said leveraged buyouts like those pursued by many private-equity firms drive corporate defaults higher and reduce the amounts investors recover when the companies are restructured.
TLDR Corporate strip mining and dumping the enterprise carcass on bag holders.
https://www.nbcnews.com/business/consumer/private-equity-rol...
> How private equity rolled Red Lobster
> When a private-equity firm bought the iconic seafood chain in 2014, it sold the real estate under the restaurants for $1.5 billion. Then the restaurants struggled to pay the rents.
> In recent years, private-equity firms have invested heavily in all areas of industry, including retailers, restaurants, media and health care. Some 12 million workers are employed by private equity-backed firms, or 7% of the workforce. Companies bought out and indebted by private equity go bankrupt 10 times more often than companies not purchased by these firms, academic research shows. In a report this month, Moody’s Ratings said leveraged buyouts like those pursued by many private-equity firms drive corporate defaults higher and reduce the amounts investors recover when the companies are restructured.
TLDR Corporate strip mining and dumping the enterprise carcass on bag holders.