Comments (10)

 
  • Analyst 1 in IB - Gen
Jul 21, 2020 - 1:35pm

DIVIDEND RECAPS........No but hire people with different expertise, inject capital for expansion, lay people off/consolidate positions, add-on acquisitions management hasnt thought to do.....basically a shit ton, it's a giant think tank of very smart people

 
Jul 21, 2020 - 2:21pm

You are right. Do you have any insight into this? Given a fund would only have a few tens / low hundreds investment professionals (mostly bankers and consultants) and very few operating partners (who would be hard pressed to know the ins and outs of every sub-industry even in their sector, how does this 'think tank' manifest itself / sources?

Financial engineering / leverage / divi recaps should be out of the window or so most people say, but there is quite a lot news flow on it so not sure it's on its way out.

 
  • Analyst 1 in IB - Gen
Jul 21, 2020 - 2:50pm

I can assure you all of those are certainly not on their way out...not as extreme as it once was but they will always be around..literally the pillars of PE.

I'm not entirely sure how it manifests itself yet as I'm in IB, but I would imagine partners have enough experience with different companies to know what does and doesn't work. I think you're overestimating the difficulty of implementing an effective growth strategy once you know what works...Further, it's not like there's many PE guys working with tech companies, healthcare, industrials, etc...partners carve out a niche of a few subverticals.

 
Jul 21, 2020 - 2:53pm

In LMM specifically, a lot of family-owned and smaller/mid-size companies are stagnant because the current owners are coasting by. You don't have much incentive to work that hard and squeeze your team when you're making a couple million a year and working 20 hours a week.

Obviously this isn't the case everywhere, but I see it all the time and there's a reason most PE firms explicitly list family-owned businesses as a target on their site.

 
Jul 21, 2020 - 2:55pm

Agree with that, but what do mega funds do? You don't take private a 10bn co and then teach them how to acquire smaller companies or help them strengthen their management team...

 
Jul 21, 2020 - 3:26pm

Weird, I thought I already posted this. What do mega funds do then? You don't take private a 10bn company to strengthen management teams and teach them how to run their biz right ?

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