![]() No matter what, it's all reward and no risk to the private equity partners. or sends the company to bankruptcy to discharge the debt. So what's the end game? The private equity firm either sells the company to another buyer, spins off the company to the stock market. Or the private equity firm might sell off some of the company's assets to raise cash for itself - but never to cover the debt used to buy the company in the first place. The private equity firm might also saddle the company with more debt to buy additional businesses - as happened when Cirque bought Blue Man Productions. That's how Cirque ended up a billion dollars in debt despite running some of the most popular live theater productions in the world.Ĭompanies bought under these deals end up having to make huge debt payments, as well as often paying management fees to the private equity firm that bought them, forcing the company to cut operating costs in order to stay in business. But instead of paying back the money itself - as you would if you bought a car or a home - the equity firm assigns the debt to the company it just bought. A private equity firms borrows a ton of money to buy a company. Whatever the company involved, the main plot points are often the same. The Atlantic told the Toys R Us version a couple of years ago, if you're looking for the details. ![]() ![]() It's a story that's been repeated too many times around the world in recent years. But Cirque was in trouble since long before "coronavirus" entered everyone's vocabulary.Ĭirque's troubles began in 2015, when it was taken over in a leveraged buyout by a private equity firm. Heck, we warned you about it back in March. The filing should not have surprised anyone who's been watching the industry. The first bullet point in Cirque's announcement of the filing said, "Company files to restructure under the Companies’ Creditors Arrangement Act in response to immense disruption and forced show closures as a result of the COVID-19 pandemic." As you might expect, the company blamed those shutdowns for its troubles.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |