Are companies owned by PE firms, with cash already invested for a period, generally considered more “recession proof” than public companies more vulnerable to consumer spending? Obviously there’s a number of incentive factors here and it will differ by industry but curious if there is any general wisdom on this. Are employees of small companies owned by PE more vulnerable to gutting? Are employees of large PE owned companies (I.e. Yahoo) more safe? Thanks
No. They don't care
They generally never do. Are the companies more likely to get affected by a recession though?
PE firms are all about profit margins. They don’t even blink before announcing massive layoffs. Honestly speaking, they don’t even need to do layoffs cuz nobody wants to work for a company owned by PE firms. You usually see very high attrition once PE firm takes over.
Agreed, I am wondering if PE owned companies like yahoo etc have more resilience to insolvency in a recession due to funding factors
If that risk is there they will strong arm their way to a solution via the cheapest path. Often that is just large layoffs, cutting all but the highest profit margin areas and trimming all the fat out of a company that they can. Not sure how you would ever think “recession proof” given the nature of PE. Now a super well funded VC backed company where you are working on the core product would seem more recession “proof”
PE-owned companies are often overleveraged. In a recession they may well go into bankruptcy.
No
No rather IMO they will be a first ones to layoff with a limited thought as profitability comes before everything else for them and they are there to mainly 'turnaround' the company and make it reach profitability faster by driving operational efficiencies
Need opinions from those who’ve actually worked under these conditions. Siemens above has good context that I’m looking for
Quite the opposite. PE firms are super profit-focused. The general rule of thumb is if your company gets acquired by a PE firm, you should look elsewhere. They will seek to maximize profit over everything else and use downsizing liberally to make quarterly targets
That's a balanced perspective. Thank you.
Apollo is going to gut and break up Yahoo and sell off the pieces. Only Apollo will profit and Yahoo employees will mostly be laid off.
Thanks, I have a friend looking at yahoo. Do you expect this over the next few years?
The gutting and selling off of assets has already begun. Right now the main tech focus is on AWS migration. That leads to opening up access to a more cost-affective dev talent pool, which means layoffs of current highly specialised devs. Id expect this at the end of this year. But dont take this as gospel. Im just a moron on the internet typing their thoughts.
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Nope 👎
Care to elaborate?
The move faster then the general market. The owners are way more profit and only profit driven and nothing else matters but the profit.