Brendan Ballou, DOJ Special Counsel and author on private equity, debates former Apollo partner Sachin Khajuria about the bankruptcy rates and operational outcomes of private equity-backed companies.
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“That also is borne out at least in some of the sort of quantitative studies, suggesting, for instance, that private equity-owned portfolio companies are 10 times as likely to go bankrupt as non-private equity-owned peers.”
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More from Brendan Ballou
Opinion
Ballou: Legal rules shift private equity incentives away from workers and customers
“Lawyers like me have created a series of rules and regulations that have changed the incentives for investors that often works for the private equity firms, but may not necessarily work for workers, for customers, even for other investors.”
Brendan BallouAug 7, 2023▶ 9:59Sachin Khajuria and Brendan Ballou – Private Equity: Profit or Plunder? (EP.331)
AssertionSupported
Ballou: Carlyle Escaped ManorCare Wrongful Death Suit Through Fund Shell Structure
“When the family of that resident sued for wrongful death, Carlisle was able to get the case against it dismissed, saying that it was not the technical owner of the nursing home chain, but rather merely advised a series of funds whose limited partners through s…”
Brendan BallouAug 7, 2023▶ 20:54Sachin Khajuria and Brendan Ballou – Private Equity: Profit or Plunder? (EP.331)
“One of the examples that I was looking at was Blackstone's acquisition of Apria Healthcare, which ultimately had to enter into a deferred prosecution agreement with the Justice Department because of allegedly selling medical devices that were never actually us…”
Brendan BallouAug 7, 2023▶ 27:45Sachin Khajuria and Brendan Ballou – Private Equity: Profit or Plunder? (EP.331)
AssertionSupported
Ballou: Sun Capital Used Section 363 Sale to Offload Friendly's Pensions
“When Sun Capital bought Friendly's, the diner chain in the Northeast, they did a lot of the tactics that we were talking about, push the company into bankruptcy, but they were not just the largest equity owner in the company, they're also the largest lender. A…”
Brendan BallouAug 7, 2023▶ 39:45Sachin Khajuria and Brendan Ballou – Private Equity: Profit or Plunder? (EP.331)
Insight
Ballou: Private equity is the latest flawed 20-year financial model cycle
“We lawyers have this incredible ability to invent a flawed business model every 20 years. Right now, I would argue that it's in large part private equity. 20 years ago, it would have been subprime lenders. 40 years ago, it would have been SNLs. 60 years ago, i…”
Brendan BallouAug 7, 2023▶ 41:20Sachin Khajuria and Brendan Ballou – Private Equity: Profit or Plunder? (EP.331)
AssertionSupported
Ballou: PE insurance failures leave state guaranty funds holding the bag
“The challenge that we've got is if these insurance companies fail, the responsibility for paying the continuing obligations will essentially default to the state guarantee corporations in which the insurance companies are incorporated. So if you have an Iowa i…”
Brendan BallouAug 7, 2023▶ 50:27Sachin Khajuria and Brendan Ballou – Private Equity: Profit or Plunder? (EP.331)
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