That just seems like a massively bad deal for red lobster, I wonder was there another way the private equity firm made out on that deal ?
I guess the reason that isn’t true is differing time horizons. If the consequences of the deal only become apparent years later, then the PE firm can sell the business before the chickens come home to roost.
But how do they sell Red Lobster without the buyer realizing what is going to happen? Who would be dumb enough to buy from a company that has a history of crippling companies it owns then selling them to suckers?
Was it… themselves, in some roundabout way?
>> PE firm can sell the business before the chickens come home to roost.
It's really no different from pump and dump. Founders love it because it unlocks a huge pay-out without the hassle, costs and reporting obligations from going public, but if you've worked at a company before and then after a major PE investment it's universally worse IME.
Holding a ton of a cash locked up in assets is highly inefficient.
Google did this - sell a building they own and lease it back. Do something else with the money.
The nice thing about the lease is that it’s a tax deductible expense for the business, and if you no longer need it, just don’t renew the lease.