Key tweets, and it's all gone to Hell.

[baggerbob]

Excellent post but I disagree with you labelling PE firms as pure capitalism. They are in fact the highest form of exploitative capitalism, as far from pure as they can be.

Beyond that, you hit the nail on the head. Kolumbo's analogy of an athletic department receiving a PE investment and an individual getting a mortgage is erroneous. If a state school (like UConn) needed funds in the form of debt funding, it would make far more sense to have the state issue a bond offering. If a private school were to look into debt funding, they would securitize the borrowing with real estate collateral. Neither would need a PE firm to take the role of banker and in all candor, nobody wants a PE form to be their banker.

PE firms don't invest their money for simple interest returns. They wouldn't remain in business of that was what they earned on their capital. They would issue the loan as an investment with many layers of preferred returns which would result in a usurious transaction (without the legal protection for the school). Picture the scenes in Goodfella where Paulie became a partner in the restaurant, ended up bleeding the owner dry, then torched the place for the insurance money. That isn't far from the manner in which PE firms operate.

PE is much like hedge fund investors, they give you enough money to keep you afloat, with strings attached. Then when the money you received isn't enough to turn things around, they end up with your buisness, and sell off the good parts, leaving you with nothing.

 

[BlueHen]

Everytime I see 'PE', I think of Phys Ed.

 

[Ha Who]

PE is much like hedge fund investors, they give you enough money to keep you afloat, with strings attached. Then when the money you received isn't enough to turn things around, they end up with your buisness, and sell off the good parts, leaving you with nothing.

I am good with that. Sell off the top of the Big and SEC to some entity leaving you with Rutgers, Vanderbilt etc

 

[Punkbo]

Without singling out any specific poster, I’m curious where these negative views of private equity are coming from. Does anyone on this board work for a PE firm or been funded by a PE firm? There is one story on the board about an “activist investor” (not sure if this is a PE investor) who provided positive results for their company. PE might not be the answer for a public university, but there are plenty of examples in the sports world and many other industries where PE has had a positive impact on the business.

Please enlighten me. Thanks!

 

[The Yakk]

Without singling out any specific poster, I’m curious where these negative views of private equity are coming from. Does anyone on this board work for a PE firm or been funded by a PE firm? There is one story on the board about an “activist investor” (not sure if this is a PE investor) who provided positive results for their company. PE might not be the answer for a public university, but there are plenty of examples in the sports world and many other industries where PE has had a positive impact on the business.

Please enlighten me. Thanks!

From working in finance for 35 years, and seeing what kind of deals are done when people with no ethical sense who are driven entirely by money get their way.

Is this question for real?

Give us some of the "plenty of examples" you cite, and if the "positive impact" is anything other than a higher return for shareholders, you can do your victory dance.

And by the way, capitalism is the system we have chosen. I'm part of it too, and I have done well. The issue here is letting these exploitative ghouls into a space that is supposed to have a mission other than generating profits. Does EVERYTHING have to be for sale?

 

[Ha Who]

From working in finance for 35 years, and seeing what kind of deals are done when people with no ethical sense who are driven entirely by money get their way.

Is this question for real?

Give us some of the "plenty of examples" you cite, and if the "positive impact" is anything other than a higher return for shareholders, you can do your victory dance.

And by the way, capitalism is the system we have chosen. I'm part of it too, and I have done well. The issue here is letting these exploitative ghouls into a space that is supposed to have a mission other than generating profits. Does EVERYTHING have to be for sale?

I might agree with you, but that ship has already sailed. Just look at the cartel that is college athletics.

 

[Punkbo]

From working in finance for 35 years, and seeing what kind of deals are done when people with no ethical sense who are driven entirely by money get their way.

Is this question for real?

Give us some of the "plenty of examples" you cite, and if the "positive impact" is anything other than a higher return for shareholders, you can do your victory dance.

And by the way, capitalism is the system we have chosen. I'm part of it too, and I have done well. The issue here is letting these exploitative ghouls into a space that is supposed to have a mission other than generating profits. Does EVERYTHING have to be for sale?

Thanks for the honest response. I’m a private investor who has worked alongside private equity for many years. While there are some “bad actors” in the business, the results in my experience have generally been positive, not only for the investor group, but also for the companies, their customers and their employees. I’ll assume you’ve had a different experience.

I agree that injecting private equity into the college experience is not ideal, but the mission of college athletics is solely about generating profits at this point. Not to repeat past narratives, but the Ivy League is the only conference which at least tries to place academics above athletics and even that is questionable.

When athletic departments spin out of the universities and become profit centers, private equity investors are much better suited to run these businesses rather than college administrators. Time will tell. Pick your poison.

 

[The Yakk]

I might agree with you, but that ship has already sailed. Just look at the cartel that is college athletics.

You're talking about something different.

Because of the public's demand for college sports, broadcasters and advertisers are throwing a lot of money at it. The P2 cartel's greed to keep ALL the money may well be ruining those sports. I think I agree with you there.

But there is nothing intrinsically wrong with schools accepting the windfall and using it to better the teams, or better the schools, or decrease tuition, or pay the athletes, or ease the burden on the taxpayers.

The mistake would be letting the financial sector in to raid the cash. Because thats what they would be doing.

I think some of the PE fantasists here really are naive enough to think those firms are coming in to help. Others are probably hoping to work in those firms and want to get their share while they can. Whatever.

 

[The Yakk]

Thanks for the honest response. I’m a private investor who has worked alongside private equity for many years. While there are some “bad actors” in the business, the results in my experience have generally been positive, not only for the investor group, but also for the companies, their customers and their employees. I’ll assume you’ve had a different experience.

I agree that injecting private equity into the college experience is not ideal, but the mission of college athletics is solely about generating profits at this point. Not to repeat past narratives, but the Ivy League is the only conference which at least tries to place academics above athletics and even that is questionable.

When athletic departments spin out of the universities and become profit centers, private equity investors are much better suited to run these businesses rather than college administrators. Time will tell. Pick your poison.

Yeah, I figured that. Your fake-naive question didnt really fool anyone.

So your support for this idea is the colleges are already greedy, then why not let me and my Wall Street friends in to grab our cut. Least surprising comment ever.

Still waiting for those examples, by the way.

 

[CL82]

Build a high speed rail for CT with a stop at Storrs and East Hartford. While we are at it, connect it to NYC and Boston.

We can finally be like other developed nations or China.

[CL82 thinking] Wants to be like China? Probably is a communist.

 

[UConnJim]

I'm not in favor of PE getting involved in college sports, but there are many business ideas that colleges need to adopt for the Athletic Departments to save money. For example, Texas and Texas A&M are state schools in Texas. Do they need duplicative AD administrative bureaucracies? Can a conference outsource their athletic ticketing to a 3rd party? Can a conference purchase athletic equipment cheaper than each individual college? Can a conference negotiate travel contracts like air and hotels cheaper than each athletic department? The more questions you ask, the greater the possibility for savings.

 

[JohnFSilver]

Everytime I see 'PE', I think of Phys Ed.

You must be like me, and don’t have millions, because that is what I thought too.

 

[JohnFSilver]

You're talking about something different.

Because of the public's demand for college sports, broadcasters and advertisers are throwing a lot of money at it. The P2 cartel's greed to keep ALL the money may well be ruining those sports. I think I agree with you there.

But there is nothing intrinsically wrong with schools accepting the windfall and using it to better the teams, or better the schools, or decrease tuition, or pay the athletes, or ease the burden on the taxpayers.

The mistake would be letting the financial sector in to raid the cash. Because thats what they would be doing.

I think some of the PE fantasists here really are naive enough to think those firms are coming in to help. Others are probably hoping to work in those firms and want to get their share while they can. Whatever.

If you are in business school, or lap up stock market, PE people are like gods.

If you worked with them, and realize that they have to drop their pants when they go to the bathroom, then you see them more as people.

They are capital. They are also using other people’s money to generate returns that consistently heavily out perform the market.

So, their interest is in free cash flow. That’s it. That is what they are there to generate .you must know that going in.

They are excellent at efficiency, process enhancement and analysis.

They are hit or miss on-execution, disregard culture culture and change management, and seriously really don’t focus on the customer.

That is my one criticism. Fanatics apparel is a good example of lack of focus on customer and product. It’s all marketing, efficiency, and scale. Their products are actually less quality than what we have had previously at a premium price.

Edit: I hate fanatics apparel.

 

[Stinger92860]

[CL82 thinking] Wants to be like China? Probably is a communist.

I was thinking who needs an environmental study, just build it.

 

[The Yakk]

If you are in business school, or lap up stock market, PE people are like gods.

If you worked with them, and realize that they have to drop their pants when they go to the bathroom, then you see them more as people.

They are capital. They are also using other people’s money to generate returns that consistently heavily out perform the market.

So, their interest is in free cash flow. That’s it. That is what they are there to generate .you must know that going in.

They are excellent at efficiency, process enhancement and analysis.

They are hit or miss on-execution, disregard culture culture and change management, and seriously really don’t focus on the customer.

That is my one criticism. Fanatics apparel is a good example of lack of focus on customer and product. It’s all marketing, efficiency, and scale. Their products are actually less quality than what we have had previously at a premium price.

Edit: I hate fanatics apparel.

Fanatics Apparel an excellent example.

An even better example is Boeing.

From the perspective of the investor class dipșȟits, Boeing is a huge success story. Maybe that's one of the examples Punkbo had in mind.

 

[The Yakk]

To be clear, before the b-school geniuses jump in to correct me: yes, I know Boeing's merger with McDonnell Douglas was not strictly a "private equity" deal.

But the principal was the same. Excess/windfall returns were unlocked for the investors, while the quality of the products--which include aircraft that carry human passengers at ludicrous altitudes and speeds--went down the toilet.

 

[uconndogs]

To be clear, before the b-school geniuses jump in to correct me: yes, I know Boeing's merger with McDonnell Douglas was not strictly a "private equity" deal.

But the principal was the same. Excess/windfall returns were unlocked for the investors, while the quality of the products--which include aircraft that carry human passengers at ludicrous altitudes and speeds--went down the toilet.

Which is why air travel is about the safest mode of transportation in the world.

 

[AzHusky]

In 1934, after the Air Mail Act of 1934 stipulated that all existing aviation holding companies had to break up, United Aircraft and Transport Corporation split into its three parts, Boeing, Pratt & Whitney, and United Air Line.

 

[JohnFSilver]

I was thinking who needs an environmental study, just build it

To be clear, before the b-school geniuses jump in to correct me: yes, I know Boeing's merger with McDonnell Douglas was not strictly a "private equity" deal.

But the principal was the same. Excess/windfall returns were unlocked for the investors, while the quality of the products--which include aircraft that carry human passengers at ludicrous altitudes and speeds--went down the toilet.

PE, sorry Wall Street bros, only is concerned with efficiency and profit. They don’t take into account the purpose of the business and its customers.

Customers have to be the center of your business, not process and management.

PE is best when they give money and go away, they are at their worst like what they did to sears and Toys R Us.

 

[gioff2323]

Can we get back to the regularly scheduled programming of key tweets or stick with the scintillating commercials around the pros and cons of PE?

 

[Ha Who]

Can we get back to the regularly scheduled programming of key tweets or stick with the scintillating commercials around the pros and cons of PE?

Give it 20 minutes

 

[giddyup]

PE is the absolute worst kind of money to take. It is highly exploitive because it is structured to ensure they are 1st money out on any side of the outcome with a guaranteed minimum return of 2x (sometimes 3x and even 4x) plus an interest or dividend accrual. If the company does well they make even more with participation on the upside. The only way a PE deal works for the owners of a business is if the business can generate more value than the cost of capital, which has to happen at a ferocious growth rate. This is how PEs blow-up companies. They mandate fast growth (scaling) and most break while a few do very well which covers their overall return. It’s a we win big if you win, and if you lose, we still win. It’s actually poisonous to free enterprise and PEs and Hedge funds are the reasons driving the increasing wealth divide. They latch on and control new wealth creation, and gamble with it. The unicorn phenomena is a symptom of this behavior. On the whole PEs are run by greedy, amoral people steeped in worshipping money through B schools and social clicks.

 

[Kolumbo]

PE, sorry Wall Street bros, only is concerned with efficiency and profit. They don’t take into account the purpose of the business and its customers.

Customers have to be the center of your business, not process and management.

PE is best when they give money and go away, they are at their worst like what they did to sears and Toys R Us.

Anyone who has followed CR knows that the customer is already not anywhere close to the center of the business.

College football has become all about profit. If what many of you anti-PE folks say is true, good. Let the PE piranhas come for their pounds of flesh, let them tear apart the system, let it blow up to smithereens, and let college football start all over again. Everyone wins the hard way.

PE is the absolute worst kind of money to take. It is highly exploitive because it is structured to ensure they are 1st money out on any side of the outcome with a guaranteed minimum return of 2x (sometimes 3x and even 4x) plus an interest or dividend accrual. If the company does well they make even more with participation on the upside. The only way a PE deal works for the owners of a business is if the business can generate more value than the cost of capital, which has to happen at a ferocious growth rate. This is how PEs blow-up companies. They mandate fast growth (scaling) and most break while a few do very well which covers their overall return. It’s a we win big if you win, and if you lose, we still win. It’s actually poisonous to free enterprise and PEs and Hedge funds are the reasons driving the increasing wealth divide. They latch on and control new wealth creation, and gamble with it. The unicorn phenomena is a symptom of this behavior. On the whole PEs are run by greedy, amoral people steeped in worshipping money through B schools and social clicks.

"On the whole PEs are {/ college football is} run by greedy, amoral people steeped in worshipping money through B schools and social clicks." It's a perfect match really.

And for those still insisting on positive results:

Our Portfolio

Everything we do is designed to build better businesses, both for today and for tomorrow

www.cvc.com

 

[gioff2323]

PE firms are mean. Boo hoo

 

[CTFAN4LIFE]

With the looming $20m+ salary floor coming against the back drop of decreasing student population, wouldn't the Big12 be the expected conference to use private money to invest and have it be via a conference tv/media network? It would seem that of all the power conferences, they'd stand to drive the most accretive revenue with the launch of a Big12 Network. And of course, UConn would be a sugar plum brand of a new Network and it's penetration into the lucrative northeast corridor.