LBO
topic on 1 show · 4 statements across 3 episodes
4 statements about LBO, every show
Lyon: Generalist Auction-Driven PE with Max Leverage Fails Long-Term
“Being a generalist, looking at auctions and trying to get as much leverage as possible and do an LBO model, I don't think was a winning recipe for long-term success.”
Vanguard observes return persistence at the individual manager level in PE
“Most of the studies say, In LBO or in VC, what type of quartile regime switching do you have from first, second, third, fourth quartile, as opposed to just at the manager level? And at the individual manager level, we do see persistence.”
25% to 30% of LBOs would go bankrupt in a normal recession
“And so much of private equity today of LBOs is single B or triple C type quality, that I would say 25 to 30% of LBOs would go bankrupt in a normal business cycle, normal recession with normal levels of delinquency.”
Heavy LBO debt prevents compounding businesses from reinvesting for growth
“Because a firm that has eight X debt to EBITDA, that is taking out all of its excess free cash flow to pay interest, can't reinvest for growth. So why buy a compounder and lever it up? In theory, you should have much higher return opportunities other than payi…”