Five More Bankrupt Companies That Earned Their Private Equity Backers a Return
In the context of the New York Times private equity take-down, I think most peHUB readers would say that there is value created by private equity firms. It's also safe to say that buyout bosses are just as capable of destroying value. Taking it a step further, I'm of the opinion that while that dividend recap may take some risk off the table, they are generally not necessary. I also agree with Dan that management fees are an abomination. With that out of the way, here are examples of five more buyout-backed companies which underwent a dreaded dividend recap and ended up in bankruptcy. There isn't necessarily a straight line from recap to bankruptcy, nor is there a clear case that the company wouldn't have failed on its own apart from private equity involvement. But it sure doesn't look good. In some cases, the firms re-invested in the company, possibly to avoid a clawback if the fund from which the investment came from ends up underwater.
