Are you American PE guys okay with what you’re doing?
I’ve been thinking about the American LBO sector for quite some time, and I genuinely struggle to understand how people feel satisfied operating within it.
Most of the people I know in private equity are motivated by the desire to build something. The businesses they back are not always socially virtuous (think; betting platforms), but the model is clear: you invest time, capital, and expertise, and you see the company grow as a result. That growth is the reward.
This is how most continental European funds operate. We build, consolidate, and expand. The fund structure provides access to credit capacity that standalone companies simply don’t have. That leverage is used to create comparative advantage within fragmented industries — to professionalize, scale, and strengthen businesses.
What I struggle to reconcile is how that entrepreneurial drive coexists with the dominant US mega-fund model. How do you feel fulfilled when upside seems to come primarily from aggressive deal structuring, fee extraction, and financial engineering — sometimes ending with companies in distress?
Toys “R” Us. Caesars Entertainment. Shopko, to name a few.
From where I stand, the Atlantic feels like a cultural divide in private equity. Two very different philosophies. Fyi. My view of the U.S market comes from what I read here and on the Internet, so I appreciate anybody correcting my viewpoint.
Yet europe has neg GDP and stagnates while US is growing GDP and gap has only widened
Same for wealth disparity gap. Check median GDP per capita PPP, and then draw your conclusions. Also GDP growth is completely irrelevant to the thread. I am asking an industry specific question to a particular subset of finance guys, not to the society overall. For all I know these bankruptcies might be even beneficial to the economy.
As long as GDP number goes up, life is great!!!
Over a long period of time, the worst off in a growing gdp economy with significant wealth disparity will still end up better off than the average person in a stagnate economy with wealth parity
You can either 1) post this on a dump like reddit where you will get plenty of “amerika bad” sympathy points, or 2) invent a time machine and ask this question pre-1776 when we may have cared.
God bless America!
bro named 3 deals from almost a decade ago as his depiction of the US PE industry
My bad. Here you go for 2025: Genesis Healthcare, Hooters, Steward Healthcare, Joann.
There are plenty of reasons why Hooters failed. Quality has declined! They let any broad these days wait!
It’s because you do PE in a less mature economy (Poland is my guess). Had a polish au pair so no hate… first crush, baddie. May god bless her.
It’s less competitive from a capital deployment perspective so naturally your leverage and PP mults are lower. Your PE is less mature so it looks more like US growth equity… what’s your average equity check? It has to be much lower than what the US MFs write so doesn’t really make sense to compare the two. If I’m wrong, slap me on the ass and call me Sally. We’re trying to make money.. this is the American way. How you play the game driven by the environment you find yourself in.
PS - you’re still doing financial engineering if you’re intellectually honest…. You’re just doing it through multiple arb on acquisitions vs. debt paydown.
Good guess :)
I completely understand that the saturation of the U.S market warrants a more creative approach to deal structuring, and often excludes growth equity business cases.
My question in general was, whether it is really the case that the difference in the area where alpha is found really changes the headhunting target pool. I.e „Does American PE lure a different type of people than EU?”
Also, while a good part of our business cases does come from multiple arb, the acquired companies are 99% extremely operationally inefficient, and really, medieval in some cases, and we do work on that. But I guess you’re right for some part.
And yeah our ticket sizes tend to be pennies compared to the american ones, but we also generally operate in smaller teams, so the compensation is often higher than even NYC, which, in a way, justifies the thread.
I think the headhunter point is driven by perceived cultural differences that have some merit on average. Not saying the general European outlook on WLB is a bad thing… we’d all love to work a little bit less sometimes… but it is incongruent with US PE “grind it out at all cost” mentality which has its own pitfalls. It’s just different and HH/hiring decision makers are cautious of it. I’ve done few deals in Europe / had good and bad euro teammates. Some grinded and some vacationed A LOT. Guessing but imagine polish attitude to WLB is somewhere in between that of Germany/FR and U.S… maybe closer to US’ because you guys generally seem to have a harder edge / more intensity within… again no hate.
I’d again point to the US GE comparison. We don’t see opptys to improve very outdated operational workflows because once a company becomes a target for UMM/MF in US bcs in all likelihood already had ~2 or more PE owners that took care of that. If it was bootstrapped (rare), they probably made these 80% of these improvements themselves to reach that scale. We’re trying to improve operations by ~10-20% vs. orders of magnitude so it’s less hand-to-hand and more at board level type of engagement.
Most of US PE isn't how you're describing it. Most of it is a) buy company; b) put in right management to grow business faster and expand it geographically or with more product lines/penetration and then c) sell it at a higher multiple.
On the MF PE model, I mean yeah at that level / stage of maturity of the company the only levers left to pull are the ones you mentioned.. you guys would be in the same boat if EU industry was as massive/mature as US. MF PE has to allocate its capital somehow. They can't do 1000 small deals every year. These are the rules of the game at that level unfortunately.
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MF PE deals make up 5% of all US deals by deal count, which I think is the right metric to examine for this discussion.
Euro post that lacks inclusivity because it's in English instead of Arabic.
-50 good boy points to social credit score, report to the Office of New Europeans for spanking
Correlation between generating wealth for a fund and generating value for society is pretty high. Of course it's not perfect. Of course there are situations where more creative or more patient capital might have turned a business into something better, and the opportunity is missed because someone guts the company.
But over many funds, many years, many deals . . very hard to generate the returns U.S. PE has generated while destroying value in the process.
Also there's cognitive bias at play any time we look at a seemingly "ruthless" business practice. It's easy to see the death of a company or the loss of jobs in bankruptcy, but its much harder to see how many other businesses are able to access credit more easily because creditors' rights are so well protected here.
The rate of business formation and capital turnover is much higher in the US than in Europe, and I don't think it can be a coincidence that the US has a much stronger VC and early-stage ecosystem. Those two are almost certainly related.
Ever since Epstein files release where everyone lost their collective mind, this site has become a complete slop bowl of lib crap.
Bro in America we’re just trying to make money. Save the existential questions for across the pond
what are your 3 best current european ideas?
Things are done differently here, yes place in society still matters, where one went to school etc. It will take tact, and patience (traits you obviously do not have) to succeed in this arena.
At Third Point, like the financial markets in general, "one's place in society" does not matter at all. We are a bunch of scrappy guys (Jewish Muslim, Hindu etc) who enjoy outwitting pompous asses like yourself in financial markets globally.
Translation: "we have absolutely 0 ideas that don't involve bureaucracy"
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Not to
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