What is with all the Private Equity acquisitions????

[GoUSC]

Yet another one…CDW has agreed to be acquired by a private equity firm for a 16% premium over their existing share price. Not that CDW is a bad company but Madison doesn’t have signifncant computer reseller experience (they do own a lot of telecom though)….

Just trying to understand this buyout madness!

[4plexowner]

this is part of one of the BIG games that Wall Street and the moneyed elite play on us suckers

by BIG I mean the timeframe is too long for most people to notice

right now they are making lots of money taking these companies private – they are using other people’s money and leverage to make these acquisitions so the profits are even sweeter

at some point in the future, the public will develop a demand for stocks – this public could be American or could be a rising middle-class in Asia

the new demand for stocks will be met by taking these same firms public again

Wall Street and the moneyed elite will make another bucket full of money in the IPOs

[4plexowner]

this is part of one of the BIG games that Wall Street and the moneyed elite play on us suckers

by BIG I mean the timeframe is too long for most people to notice

right now they are making lots of money taking these companies private – they are using other people’s money and leverage to make these acquisitions so the profits are even sweeter

at some point in the future, the public will develop a demand for stocks – this public could be American or could be a rising middle-class in Asia

the new demand for stocks will be met by taking these same firms public again

Wall Street and the moneyed elite will make another bucket full of money in the IPOs

[The-Shoveler]

Nor_LA-Temcu-SD-Guy

I have a different take on this, In most cases I think the (pension funds and Banks) are going to be left holding the bag, as these buyouts rarely pay off. Most of the time the people who made the company successful in the first place leave for new start-ups.

The only LBO buyout that would make sense would be one where the company was bought at a discount and immediately divided up and sold for it’s parts (sum of the parts thing).

In short the only ones getting rich here are the deal enablers.

[The-Shoveler]

Nor_LA-Temcu-SD-Guy

I have a different take on this, In most cases I think the (pension funds and Banks) are going to be left holding the bag, as these buyouts rarely pay off. Most of the time the people who made the company successful in the first place leave for new start-ups.

The only LBO buyout that would make sense would be one where the company was bought at a discount and immediately divided up and sold for it’s parts (sum of the parts thing).

In short the only ones getting rich here are the deal enablers.

[Anonymous]

I fully agree with Nor_LA that the dumb pension fund managers and insurance companies that ‘invested’ in the private equity funds are going to be left holding the bag when, invariably, 9 of 10 of these buyouts fail.

Conclusion — if you are counting on a defined benefit pension payout, don’t. With your pension proceeds invested in corporate bonds, the stock market, venture capital, and private equity, such will quickly move down to 15-20% of peak value during the upcoming depression.

[Anonymous]

I fully agree with Nor_LA that the dumb pension fund managers and insurance companies that ‘invested’ in the private equity funds are going to be left holding the bag when, invariably, 9 of 10 of these buyouts fail.

Conclusion — if you are counting on a defined benefit pension payout, don’t. With your pension proceeds invested in corporate bonds, the stock market, venture capital, and private equity, such will quickly move down to 15-20% of peak value during the upcoming depression.

[no_such_reality]

The tax law is changing hence you’re seeing a rush to complete the private offerings before they become more expensive.

[no_such_reality]

The tax law is changing hence you’re seeing a rush to complete the private offerings before they become more expensive.

[(former)FormerSanDiegan]

Here’s their secret. They understand math, and they use a simple arbitrage.

They borrow money at 6%, combined with some cash, to purchase businesses that earn (or could be made to earn in their opinion) 10% or more

[(former)FormerSanDiegan]

Here’s their secret. They understand math, and they use a simple arbitrage.

They borrow money at 6%, combined with some cash, to purchase businesses that earn (or could be made to earn in their opinion) 10% or more

[The-Shoveler]

Nor_LA-Temcu-SD-Guy

Sometimes (most times) the Math changes 10% becomes 5% or worse.

[The-Shoveler]

Nor_LA-Temcu-SD-Guy

Sometimes (most times) the Math changes 10% becomes 5% or worse.

[(former)FormerSanDiegan]

Yes, sometimes the math does change. Just pointing out their motivation.

Reminds me of buying real estate for 5% interest only when the property goes up by 20% per year. Not fun when the music stops.

[(former)FormerSanDiegan]

Yes, sometimes the math does change. Just pointing out their motivation.

Reminds me of buying real estate for 5% interest only when the property goes up by 20% per year. Not fun when the music stops.

[Author]

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