This is the inside story of private equity dealmaking.Over the last 40 years, LBO fund managers have demonstrated that they are good at making money for themselves and their investors. But when one looks beneath the surface of the transactions they engineer, it is apparent that these deals can, at times, go spectacularly wrong.Through 14 business stories, all emanating from the noughties' credit bubble and including headline-grabbing names like Caesars, Debenhams, EMI, Hertz, Seat Pagine Gialle and TXU, The Debt Trap shows how, via controversial practices like quick flips, repeat dividend recaps, heavy cost-cutting and asset-stripping, leveraged buyouts changed, for better or for worse, the way private companies are financed and managed today.From technological disruption in the worlds of music recording and business-directory publishing to economic turbulence in the gambling, real estate and energy sectors, highly levered corporations are often incapable of handling market corrections when debt commitments start piling up. Behind the historical events and the financial empires erected by some of the elite private equity specialists, these 14 in-depth case studies examine how value-maximising techniques and a short-cut mentality can impact investment returns and portfolio assets.Whether you are a PE practitioner, investor, business manager, academic or business student, you will find The Debt Trap to be an authoritative and fascinating account.
Introduction
Chapter 1. Tricks of the Trade
Part One. Asset-Shifting: Secondary Buyouts and their Offspring
Chapter 2. Gala Coral - Game on!
Part Two. Asset-Flipping: Recaps and Quick Flips, or the Art of Making a Quick Buck
Chapter 3. Hertz - The Need for Speed
Chapter 4. Celanese - Rich Chemistry
Part Three. Financial Engineering and the Risks Pyramid
Chapter 5. TXU - Power Struggles
Chapter 6. EMI - Out of Tune
Part Four. Repurchases or Relapse Buyouts: Seller's Remorse
Chapter 7. PHS - Washed-up
Chapter 8. Frans Bonhomme - Down the Drain
Part Five. Listing, Delisting, Relisting: On a Fool's Errand
Chapter 9. DX Group - Going Postal
Chapter 10. Debenhams - Debt Never Goes Out Of Fashion
Part Six. Private Investments in Public Equity: PIPE Dream or Nightmare?
Chapter 11. PagesJaunes - The French Disconnection
Chapter 12. Seat Pagine Gialle - The Italian Job
Part Seven. PE-backed IPOs: The Search for a Patsy
Chapter 13. eDreams - Reality Fights Back
Chapter 14. Foxtons - Timing the Market
Part Eight. Asset-Stripping: Modern-day Creative Destruction
Chapter 15. Caesars Entertainment - PE's Version of Strip Poker
Part Nine. Trick or Treat
Epilogue. Sheriffs and Cowboys
Acknowledgements
About the author
Endnotes
Index
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