The Ledger
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Private equity historically made most of its profits below 7x EBITDA
“First, it said that private equity had made the majority of its money in deals done at less than seven times EBITDA.”
Connaughton: Bain Capital generates average returns of 20% to 25%
“So think about low rates of 1920, and 21, where we raised the capital, and then think about Our average returns being 20 to 25%.”
Connaughton: Bain Capital started eight new businesses internally since 2015
“Starting businesses, we've started eight new businesses since 2015, and it's all with our people, and I think the opportunity to do that not by having a brand, And capital, but by having people who have decided they really wanted to really pursue an opportunit…”
Connaughton: Bain Capital started with VC and growth equity, not institutions
“We didn't have LPs that were institutional. We didn't know anybody on Wall Street. We actually started out in venture capital and growth equity because you could just write checks, didn't rely on other people's checks. And the money we raised was from the part…”
Connaughton: Bain kept the same Asia-Pacific country managers for 20+ years
“We've had the same country managers in Japan, in China, in India, Korea, and Australia from the very beginning, and we've been there for 20 plus years”
Merrill Lynch and Three Other Banks Underwrote HCA Buyout Debt
“Merrill Lynch first managed to get their own internal approvals, not just for the equity, but for the debt. Speaking for about a quarter of the debt deals, we decided we needed three more banks to be able to fill out the whole thing. And so then we went to the…”
2006 HCA Buyout Had a $33 Billion Enterprise Value
“Nobody would have really believed, and frankly, we weren't even sure in that 2005, six timeframe, could you really do a deal as big as HCA, which was a thirty-three billion dollar enterprise value transaction.”
2006 HCA Deal Was the Largest Buyout Ever at the Time
“It was the largest transaction ever at the time, and by far the largest that had happened since the late eighties during that first wave of big LBOs.”
Gordon: HCA De-Levered via IPO as Debt Matured in 2011-2012
“We did go public, so that created a de-levering event. The debt markets, you know, improve a lot between 2008 or nine, which is when we would have been having this conversation, and 2011 or 12, which is really when our debt started to mature.”
Bain, KKR, Merrill Lynch, and Frist Family Backed HCA Equity
“It was Bain Capital, KKR, Merrill Lynch, and the Frist family speaking for the equity, but then we also needed to figure out how do we fill out north of twenty billion dollars worth of debt that was going to need to be underwritten for this transaction.”
Gordon: Tommy Frist Jr. Initiated HCA Buyout Outreach in Late 2005
“And actually, Tommy called us. It was the original genesis of this for us back in, it was probably late, 2005, maybe early 2006, with what almost started off as, hey, I've got a crazy idea, because the transaction was so large that no one ever really would hav…”
Gordon: HCA Entered 2008 Financial Crisis Protected by Hedged Interest Rates
“Day one, that didn't affect our balance sheets. Our balance sheet was all underwritten and put in place, and we'd, you know, swapped out our interest rates, and so we had what we had from a balance sheet perspective.”
Bain Capital exited HCA at around $75 per share after 2011 $30 IPO
“We went public at 30 dollars a share, which felt like a good valuation to us. And, but look, I don't think the Frist's have sold many of their shares over the years. And we ended up, I think, selling our last shares around 75 dollars a share or so.”
Connaughton: Bain bought Baxter carve-out at 3x versus modern 15-20x multiples
“And so we negotiated a carve out three times even though at that time. Which obviously today in the diagnostic world, things trade at 15 to 20 times, so that's a, in of itself, a big opportunity for us.”
Connaughton: Bain Turned $7M Baker Hughes Carve-Out into $40M–$50M Profit
“The sellers in this case had two hundred million dollars of preferred on a business that was losing fifty million dollars, and they asked us to put up some money at least to show that we had some risk capital, so we put up seven million dollars. For a business…”
Campbell: Healthcare royalty investors grew from single digits to dozens
“So over time that's included things like investing in healthcare royalties, which when we first started looking at it, there were a single digit number of investors and partners in that market. These days there's, you know, many dozens”