Moody's: Most Bubble-era LBOs Struggle, while Dollar General, HCA Shine
Many bubble-era LBOs have turned in poor performances, according to a report from Moody's Investors Service. Moody's looked at 40 LBOs from 2006 to early 2008, the go-go days for buyouts. While a majority of the companies have seen their financial leverage drop, earnings and revenue growth for most have been "significantly below" projections, Moody's said. Exits for the bubble group have also been rare. In fact, most are still owned by their PE owners, the report said. Seven have completed IPOs and only one target has been sold (that's Alltel. Verizon Wireless acquired Alltel in 2009; it had been owned by TPG and Goldman Sachs PE unit). Only five of the companies have paid “material dividends," while three companies--Chrysler, Aleris International and Station Casinos-- have filed for bankruptcy, Moody's said.
