Seeking some clarification on PE strategies, as far as what happens following the actual investment. Let's assume here that I'm talking about LBO funds. I know that the megafunds (KKR, BX, etc) look to increase returns via "financial engineering," (while taking a relatively hands off approach to operations), while other buyout firms may work towards EBITDA growth through operational improvements (cost cutting, bolt-ons, etc). So two questions:
1. What exactly is "financial engineering," in this context?
2. What do UMM PE firms (like CVC, Madison Dearborn, Thoma Bravo, etc) do to enhance returns? Is their focus financial engineering, operational improvements, or a combination of the two?
Optimizing your capital structure with instruments that generate best returns
All wildly different but if you were to take a general UMM player the answer would be a combination of the two, however operational improvements is a very wide statement and can look very different depending on where you go
Appreciate the clarity here. Stupid question, but could you give me an example of adjusting the capital structure to generate returns? Would it just mean taking on more leverage, for example?
Lever up to the tits with every debt tranche offered costing at least 1 bp less than your base case return
Ea voluptates corporis et facere quia. At sed dolore sed omnis voluptatem.
Quis omnis ab repellendus eum voluptatem nam. Saepe sed minima atque molestiae deserunt harum adipisci. Earum ex earum aut exercitationem quas ea. Dignissimos a ab dolorem totam sit dolor. Iusto voluptas non inventore omnis et ipsum. Blanditiis error iste nostrum omnis optio.
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...