You could also say “all private equity is not created equal.”
I think that the common belief that private equity swoops in and sucks the company dry like a vampire is only a half-truth. The “company flipper” style private equity companies are usually buying companies that are not doing all that well in the first place.
Not unlike a venture capital firm investment in a startup, private equity firms probably don’t expect 100% of their investments to pan out. The idea is to buy a struggling company for pennies on the dollar, turn it around, make a big return on that investment. However, turning around a struggling business isn’t always going to happen, and when it fails the private equity firms are perceived as vultures.
A good example of a company that has done well under private equity ownership has been Popeyes. They launched their extremely popular chicken sandwich under private equity ownership. The parent company has for the most part left the strong parts of the business alone (keeping the product up to a good enough standard) while appeasing franchises’ need for more profitable operations, leading to growth in its footprint.
I think that the common belief that private equity swoops in and sucks the company dry like a vampire is only a half-truth. The “company flipper” style private equity companies are usually buying companies that are not doing all that well in the first place.
Not unlike a venture capital firm investment in a startup, private equity firms probably don’t expect 100% of their investments to pan out. The idea is to buy a struggling company for pennies on the dollar, turn it around, make a big return on that investment. However, turning around a struggling business isn’t always going to happen, and when it fails the private equity firms are perceived as vultures.
A good example of a company that has done well under private equity ownership has been Popeyes. They launched their extremely popular chicken sandwich under private equity ownership. The parent company has for the most part left the strong parts of the business alone (keeping the product up to a good enough standard) while appeasing franchises’ need for more profitable operations, leading to growth in its footprint.