Not to take away from challenges of the legacy telecommunications industry right now, but this article slides in the private equity LBO part of Avaya's story at the very end - and then only hints at what happened here.
I hope the pensioners and benefits obligations get paid the money they are owed ASAP, because this is a classic story of private equity (Silver and TPG) financially engineering a cash-siphon from a dying dinosaur and then "phoning it in" when it came to the manage out/re-price of new risk.
I don't have a problem with mega private equity and I can see some kool-aid drinkers saying "any acquisition made in October 2007 (the technical peak of the pre-crisis market) was going to have a tough time working out as played". But this was a deal designed to fail from the start.
Basically the private equity stunt here was: find a company that has $100, take $99 of it, use the company's last $1 to buy a lottery ticket, try to convince other investors that $1 ticket is a winner. They failed huge here.
I hope the pensioners and benefits obligations get paid the money they are owed ASAP, because this is a classic story of private equity (Silver and TPG) financially engineering a cash-siphon from a dying dinosaur and then "phoning it in" when it came to the manage out/re-price of new risk.
I don't have a problem with mega private equity and I can see some kool-aid drinkers saying "any acquisition made in October 2007 (the technical peak of the pre-crisis market) was going to have a tough time working out as played". But this was a deal designed to fail from the start.
Basically the private equity stunt here was: find a company that has $100, take $99 of it, use the company's last $1 to buy a lottery ticket, try to convince other investors that $1 ticket is a winner. They failed huge here.