private equity

The company I work for has been acquired by a private equity firm.

We were privately owned. Upper management says the leadership is not changing.

Is it downhill from here?

Some PE firms seem to be decent stewards, at least until they want to sell. Others are rapacious.

You might do some searching on the reputation of the firm that took over your company and decide to stick it out or update your resume depending on what you read.

There is no way to tell how things will go, could be better, could be worse. ALWAYS keep your resume updated, and always keep your ears open and network for new and better opportunities. One sure thing, they will have zero loyalty to you except for what you can do for them to make money. That's a two-way street, or it should be if you're smart.

GENERALDISARRAY said:

The company I work for has been acquired by a private equity firm.

We were privately owned. Upper management says the leadership is not changing.

Is it downhill from here?

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One must first ask; why sell? The second question to ask; how old is "upper management"?

The answer of these 2 questions will determine ... your fate.

Watched a friend's company go thru that. Everything was ok for awhile, then they thought they could dump all their small customers and only hunt for really big fish. Brought in the MBA types, bought a few $M of new equipment and they went TU within 3 years. Best of luck, but stay very aware of what's happening around you.

As a rule, when private equity buys a privately-held manufacturer or service company, the equity people are interested in making money as quickly as possible. They are not interested in the product. They are not interested in the customers. They are not interested in the employees.

The "good" scenario is that the PE folks sell off the company quickly to a new owner who actually wants the business, before operations are too badly disrupted.

One of the many "bad" scenarios is the PE folks strip the company of assets, and fold what remains. A variation on that is they put the remnant of the company into bankruptcy, so as to pay off as few debts as possible.

Does the company have a well funded pension plan?
Does the company have significant assets in the way of real estate?

If yes to both I'd be worried.

The sandblasters were bought by two billionaire brothers....sort of decent guys ,as I had known them before .....the new manager had big ideas,everthing new ,no more 40yr old forklifts and cranes .....that morphed into serviced leasing...very expensive,too expensive ...Now the big sheds are rented out to boatbuilders,hardly surprising as the brothers key business was renting out big sheds.

Private equity has done a good job gutting the entire country, the measly company you work for should only take them a short while to destroy.

kustomizingkid said:

Private equity has done a good job gutting the entire country, the measly company you work for should only take them a short while to destroy.

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But we keep voting in the same people who write the rules to benefit the asset strippers. Blue and Red, this crosses the aisles.

Why do we do that?

Milland said:

But we keep voting in the same people who write the rules to benefit the asset strippers. Blue and Red, this crosses the aisles.

Why do we do that?

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We have the illusion of choice... I think that is very apparent.

dust off the resume.

Private equity could mean a broad spectrum of types of firms, not exactly one answer fits all. Lets assume they have a value add approach not raider pirates (the later get all the attention but most I've seen are the former). In theory it should work - capital constraints are eased/removed, more sophisticated management, new ideas, connections etc. It doesn't necessarily though because of the deadly combination of two things - they don't know the business/industry and ego. Very often not knowing the business isn't that bad (often existing management is caught up their own BS and lacks perspective) if the money were open minded, collaborative and gave management the respect of knowing the business. But throw in egos and the combination is deadly. Of course they are smarter, right? After all they have the money and the education (often view management as the yokels)....combine that with a ready mechanism for always being right (they have hand after all) and you cannot depend on good decision making.

I wouldn't work for them as senior manager. too frustrating seeing friends put through that wringer. Senior management can also expect to spend 1 day a week reporting, meaning there's a 20% reduction in bandwidth to work on the business, see customers etc. Don't kowtow and you'll quickly be set aside.

For the line worker its probably not as direct a change. Although you can't depend on decision making, especially long term. Decision making gets messed up by ego as described, but also by overarching strategies that might not have anything to do with that particular business - e.g. they decide the like another sector better, lose patience and want to cut their losses etc. Its different owning a managing a portfolio that you don't deeply know or have attachment to, and being all in on one business that is all consuming of your capital, time and energy

Not much above with which I would disagree.

#12 Mcgyver
"ego"

Confirmed by my, singular, experience.
A family of Venture Capitalists bought the firm I worked for, small fry, not the Arthur Rock grade, who finance start ups like
Google.

Management staff started being dismissed after a couple of weeks, decent hard-working people, with mortgages.
50% replaced by family members or friends, often part time.
50% not replaced, because "we need to work smarter, not harder". Yes, right.

The family members were very fond of themselves, the employees were cannon fodder.
The head of the family had a propensity for lecturing the staff about efficiency, and always included a story about Catherine the Great in his lecture.
These lectures frequently, and deliberately, took place on Friday afternoon when staff were leaving, some to collect children from school.

I never saw the list of staff whose services were to be dispensed with, but my name was included, because everyone was listed!
At the end of the next lecture I asked "Was this before or after she [Catherine the Great] had her husband murdered?"
No response.
I was promoted to #1 in the list and then sacked.
I was only two years from retirement and could afford to retire, so I did; most were not that well situated financially.

The day that an attorney is named as the new CEO, you have waited too long to leave.

sealark37 said:

The day that an attorney is named as the new CEO, you have waited too long to leave.

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Hah! No arguing with that point.

GENERALDISARRAY said:

The company I work for has been acquired by a private equity firm.

We were privately owned. Upper management says the leadership is not changing.

Is it downhill from here?

Click to expand...

It already was.

When.. you have more than two others BETWEEN you and the ultimate Chairman or owner.. AND said "decision maker" does not know who YOU are ...and consider you a valuable team member?

You are in too large of a firm for your current market value.

So you get blindsided.

It isn't about whether you, "personally", have the power to alter the course of events. Nice if you can make that level of positive contribution, but let's not kid ourselves.

EVERYBODY can be replaced "somehow". Or humans would not be permitted to ever die.

It is more important- in the practical sense - that you see opportunity or disaster coming EARLIER than "others".

And can minimize the damage to yourself. Or maximize the gain.

"One eyed man in the land of the blind" thing.

If you are not he?

You are at least... "at a disadvantage."

Always. Not just at times like this.

Milland said:

But we keep voting in the same people who write the rules to benefit the asset strippers. Blue and Red, this crosses the aisles.

Why do we do that?

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It seems even if the rules are changed the immoral with deep pockets will hire people to help them exploit them and game the system. A good example of that is Trump. He probably could have paid off his debts on the businesses he bankrupted with ease, but his greed and lack of a conscience made him think about nothing but the money.

CITIZEN F16 said:

I always thought they should be called vulture capitalists.

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When, ever, were they NOT?

??

Very good concern, difficult to answer. Lots of different strategies for equity firms but the #1 goal is to "make money". They do this by either running the company "better" and keeping it for at least a decent period of time (at least they try too or think they are) or they "fix it up and sell" (like restoring an old house). It can come out "ok" (the company can potentially operate better) but how it's going to be for you and how it's going to be for the equity firm can be completely independent. In theory, going from private to equity firm should formalize operations more but that's no guarantee it will come out better for you.

I'd give it a bit of time but always be a bit on the cautious side of things (like you should be anyway), e.g. on the lookout for a potentially new/better job. Try to do some looking-up on the firm to see what their strategy history is (mostly are they keeping and running well or fixing up and selling). But even that can have little to do with how well it works out for you.

I'm doing some big project work for a privately-owned company that is going to do contract mfg for an equity firm owned company (was private about 5 years ago). That company (the one bought by the equity firm) is mostly moving it's production either out of the US or to other companies so they can just concentrate on marketing and sales. It's not necessarily a bad strategy for them but some very good employees are going to lose their jobs, not good for them. But my client is going to get some good work to do. My philosophy in "win-win" is that there's always a loser (some long term employees in this case).

Good luck! (about the best I can hope for you).
The Dude