Sunday 7 January 2007

Private Equity Update

I have posted numerous times on the Private Equity business (here, here, here and here) and the threat it has to our economy. I notice that commenters' here are split as to whether this is true or not.

I understand the view that this is merely a working of capitalism in market form. However, what is missed is that an unregulated market has allowed distortion to grow. huge finance has been raised to buy poor-performing companies that have turned out to be not so easy to turn round, see here in today's Sunday Times.

So what I hear you ask? The only people losing money are the City capitalists? This is the devil though, as if these companies go into administration they may well use the pension pot for the staff or even if no buyer can be found, go bankrupt. Now they are only going to go into administration because they are so heavily indebted. Money the venture capitalists have already taken out in profit.

So the Venture Capitalists have lost their own money and possibly the livelihoods of the companies too. You may say these companies were doomed anyway; but the unsustainable level of debt they have been burdened with won't have helped, will it?

Earlier this week, Little Chef, was a near victim of this, being bought out at the last minute. This kind of Private Equity failure will hugely increase throughout this year due to crazy deals that have been completed in the last couple of years finally collapsing.

Don't expect 3% GDP growth for the economy this year.

10 comments:

Stan Bull said...

CU,
Apologies.I have re-linked to your blog. Teeting troubles with the new template. Apparently, borrowing by private equity firms currently stands equivalent to 43% of the total value of all the companies listed on the FTSE 100.
And there's no chance of the private equity frenzy abating...

Anonymous said...

I wish I understood high finance more, but maths is one of my failings. Glad to hear that Little Chef has been saved, not sure for how long, it will need updating, can't stay rooted in the past.

Anonymous said...

Little Chef has been saved? When did this happen?

Bel (www.beltoday.com)

Rigger Mortice said...

the debt bubble will burst and whilst there is a school of thought at the mo that says the inflation we're experiencing is 'profit push' not cost push,my personal belief is that the sort of deficits the US is running on are unsustainable and any run on the dollar will push rates up.

the UK is similarly exposed.

James Higham said...

Would you put the past Rover shemozzle into this category?

CityUnslicker said...

Ellee/Bel - About half have been bought for nothing. How long they survive with such a poor busines model is difficult to know.

JH's ref to Rover is very perceptive as always. It is a similar mess. At least the government did not push £50 million down a hole this time.

Rigger- as usual, you ahev a good grasp of the curren situation. We can live with more debt at lower interest levels that historically, but not as much as we have run up.

pommygranate said...

Slicker

Private Equity has been an unmitigated 'good thing' for the British economy.

It is an easy target to bash, though, as its professionals are paid vast sums of money often for doing no more than layering debt onto under-leveraged businesses and taking advantage of the interest-tax relief.

Far from worrying about businesses going under, I worry that not enough poorly performing businesses are being allowed to fail, as they are being kept alive by the largesse of overcapitalised banks.

Capitalism needs failures as well as success stories to survive.

Though loking at the latest crop of PE deals, i am fairly confident that failure is just around the corner.

Anonymous said...

we can take ourselves private again later. Only way to get proprietary dealflow.We urgently need a public market currency. To short sell our Los Angeles private equity.It is our master plan. Take everyone else private while we go public and the passive index trackers will only be able to buy us.Permanent capital -
10 year lockups just don't cut it anymore.Future fee monetization,getting out while we can...anything else plausible

Anonymous said...

aaaa片, 免費聊天, 咆哮小老鼠影片分享區, 金瓶梅影片, av女優王國, 78論壇, 女同聊天室, 熟女貼圖, 1069壞朋友論壇gay, 淫蕩少女總部, 日本情色派, 平水相逢, 黑澀會美眉無名, 網路小說免費看, 999東洋成人, 免費視訊聊天, 情色電影分享區, 9k躺伯虎聊天室, 傑克論壇, 日本女星杉本彩寫真, 自拍電影免費下載, a片論壇, 情色短片試看, 素人自拍寫真, 免費成人影音, 彩虹自拍, 小魔女貼影片, 自拍裸體寫真, 禿頭俱樂部, 環球av影音城, 學生色情聊天室, 視訊美女, 辣妹情色圖, 性感卡通美女圖片, 影音, 情色照片 做愛, hilive tv , 忘年之交聊天室, 制服美女, 性感辣妹, ut 女同聊天室, 淫蕩自拍, 處女貼圖貼片區, 聊天ukiss tw, 亞亞成人館, 777成人, 秋瓷炫裸體寫真, 淫蕩天使貼圖, 十八禁成人影音, 禁地論壇, 洪爺淫蕩自拍, 秘書自拍圖片,

做愛的漫畫圖片, 情色電影分享區, 做愛ㄉ影片, 丁字褲美女寫真, 色美眉, 自拍俱樂部首頁, 日本偷自拍圖片, 色情做愛影片, 情色貼圖區, 八國聯軍情色網, 免費線上a片, 淫蕩女孩自拍, 美國a片, 都都成人站, 色情自拍, 本土自拍照片, 熊貓貼圖區, 色情影片, 5278影片網, 脫星寫真圖片, 粉喵聊天室, 金瓶梅18, sex888影片分享區, 1007視訊, 雙贏論壇, 爆爆爽a片免費看, 天堂私服論壇, 情色電影下載, 成人短片, 麗的線上情色小遊戲, 情色動畫免費下載, 日本女優, 小說論壇, 777成人區, showlive影音聊天網, 聊天室尋夢園, 義大利女星寫真集, 韓國a片, 熟女人妻援交, 0204成人, 性感內衣模特兒, 影片, 情色卡通, 85cc免費影城85cc, 本土自拍照片, 成人漫畫區, 18禁, 情人節阿性,

Anonymous said...

情色電影, aio交友愛情館, 言情小說, 愛情小說, 色情A片, 情色論壇, 色情影片, 視訊聊天室, 免費視訊聊天, 免費視訊, 視訊美女, 視訊交友, ut聊天室, 視訊聊天, 免費視訊聊天室, a片下載, av片, A漫, av dvd, av成人網, 聊天室, 成人論壇, 本土自拍, 自拍, A片, 愛情公寓, 情色, 舊情人, 情色貼圖, 情色文學, 情色交友, 色情聊天室, 色情小說, 一葉情貼圖片區, 情色小說, 色情, 色情遊戲, 情色視訊, 情色電影, aio交友愛情館, 色情a片, 一夜情, 辣妹視訊, 視訊聊天室, 免費視訊聊天, 免費視訊, 視訊, 視訊美女, 美女視訊, 視訊交友, 視訊聊天, 免費視訊聊天室, 情人視訊網, 影音視訊聊天室, 視訊交友90739, 成人影片, 成人交友,

免費A片, 本土自拍, AV女優, 美女視訊, 情色交友, 免費AV, 色情網站, 辣妹視訊, 美女交友, 色情影片, 成人影片, 成人網站, A片,H漫, 18成人, 成人圖片, 成人漫畫, 情色網, 日本A片, 免費A片下載, 性愛, 成人交友, 嘟嘟成人網, 成人電影, 成人, 成人貼圖, 成人小說, 成人文章, 成人圖片區, 免費成人影片, 成人遊戲, 微風成人, 愛情公寓, 情色, 情色貼圖, 情色文學, 做愛, 色情聊天室, 色情小說, 一葉情貼圖片區, 情色小說, 色情, 寄情築園小遊戲, 色情遊戲, 情色視訊,