This is a robbery in progress. Private equity firms borrow massively to buy companies, and use corporate cash reserves to pay themselves back. Workers who supply the value to the business see nothing; in fact, to service the debt, companies usually cut staff. When the retailer collapses under the borrowing weight, all workers lose their jobs. And even when sales go up, like they have by 5 percent annually in the toy sector over the past five years, dominant toy sellers like Toys“R”Us cannot compete because of the debt burden. The company’s profitability was increasing when it filed for bankruptcy.
This is the private equity plan for any business they focus on. Borrow to buy it, raid the cash, load the company up with debt, restructure, split-it-up, sell off pieces to get as much cash as possible, distribute that cash to the partners and use some of it to lobby for tax breaks for the corporations and the wealthy.
Some day they will have it all.
note.. There's no mention of online-sales or Amazon's part in the death of retail chains which hurts the article's message and I think basically misses what really killed retail. However, this is still private equity's MO. I think they basically got lucky with their retail trade. There were able to raid the coffers before Amazon and Internet sales kill the chains anyway.
again....Some day they will have it all.
'via Blog this'
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