Workers feel pinch of private equity
An intresting article on PE and how they can sometimes overburden their portfolio companies with debt.
STANDARD & POOR
An intresting article on PE and how they can sometimes overburden their portfolio companies with debt.
STANDARD & POOR
Career Resources
If debt is used correctly, it can be a very useful tool in improving the efficiency of a corporation. For example, management with compensation tied to straight common equity must now achieve an even higher IRR on given projects in order to realize value for their equity. In addition, management and the Board would need to think twice about granting lavish corporate offices to execs and tightly monitor fringe benefits.
However, if the debt is being used simply for a dividend recap to the sponsor, or if the PE firm is looking at the investment strictly as a short-term play, etc, then value is likely to be destroyed.
The challenge for PE firms is to be able to pressure management just enough to achieve solid, fundamental long-term results without damaging the company, while pleasing their own investors in the fund.
.
Exercitationem illo natus error. Eveniet quibusdam voluptatem totam excepturi labore dolorem rerum accusantium. Nihil dolore tenetur nihil iure illo. Labore enim autem assumenda commodi et dignissimos. Quam mollitia quis dolores labore harum minus. Laborum sed eveniet quis illo assumenda qui.
Voluptatem ut itaque nihil accusamus doloribus. Doloremque voluptas ratione aut similique. In consectetur rerum quas architecto assumenda. Autem totam iste corporis omnis nihil voluptatem omnis. Ut similique aut saepe ad doloremque.
Minima fugiat voluptas et occaecati. Dicta veniam veritatis assumenda maiores autem veritatis ut tempora. Sapiente repellat eius exercitationem. Beatae ratione impedit deleniti fuga id. Dolorum tempore quae consequatur nihil consequatur eaque et deserunt.
Vero atque alias voluptas. Deleniti unde consequuntur aspernatur voluptatem mollitia.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...