I believe someone posted something similar, if not the exact twitter video a while back. To ME personally, this sound more like vulture funds than general private equity. Every PE guy I've ever met had the same general strategy, leverage to the tits, invest EVERYTHING back into the company for 3-5 years, improve it as much as possible, and then exit at 3-5X their investment after paying off debt, rinse and repeat.
This specific strategy sounds more like the vulture fund where they try to extract as much as they can with as little effort, and structure the debt in such a way they can just dump it all on the bought company so they can leave it on it's desiccated carcass when they move on to the next company to scavenge.
And as I pointed out back then, vulture funds are a minority of funds in the PE world.
The industry term is “distressed debt/special situations” funds. They come in after a firm has been wrecked with too much leverage and they pay pennies on the dollar for the fulcrum security, which is usually some kind of debt that converts to equity.
The firms that wreck the companies in the first place are plain vanilla leveraged buyout shops. This specific tactic done overtly was big in the 80s. Now they’re more covert about it but the end result is the same.
I believe someone posted something similar, if not the exact twitter video a while back. To ME personally, this sound more like vulture funds than general private equity. Every PE guy I've ever met had the same general strategy, leverage to the tits, invest EVERYTHING back into the company for 3-5 years, improve it as much as possible, and then exit at 3-5X their investment after paying off debt, rinse and repeat.
This specific strategy sounds more like the vulture fund where they try to extract as much as they can with as little effort, and structure the debt in such a way they can just dump it all on the bought company so they can leave it on it's desiccated carcass when they move on to the next company to scavenge.
And as I pointed out back then, vulture funds are a minority of funds in the PE world.
The industry term is “distressed debt/special situations” funds. They come in after a firm has been wrecked with too much leverage and they pay pennies on the dollar for the fulcrum security, which is usually some kind of debt that converts to equity.
The firms that wreck the companies in the first place are plain vanilla leveraged buyout shops. This specific tactic done overtly was big in the 80s. Now they’re more covert about it but the end result is the same.