Penny Drain

Who's your favorite Beatle? A new report profiles the personalities of private equity firms, comparing the strategy of each to a Fab Four episode.
Laura CameronMarch 3, 2008

As private equity firms wait out the credit crunch, researchers are poring over data to test whether buyout executives deserve their reputation as sack-happy asset strippers. Ratings agency Moody’s, for its part, looked at nearly 300 buyout deals between 2002 and 2007 in a recently published study. It assessed how the major private equity players managed recent takeovers, providing insight into the modus operandi of each firm, which CFO Europe summarises by drawing parallels with pop history.

Cerberus extracted big dividends from the largest share of its portfolio of companies, bringing to mind the outsized divorce settlement sought by Heather Mills from former Beatles star Paul McCartney. Thomas H. Lee, meanwhile, played the Yoko Ono role to the John Lennon of its acquisitions, with more than 60% of its portfolio companies receiving a ratings downgrade after coming under its influence. Exposing companies to exciting new experiences, à la Maharishi Mahesh Yogi and George Harrison, Madison Dearborn was the firm most likely to push portfolio companies to pursue M&A deals. Finally, like original Beatles drummer Pete Best, Texas Pacific Group sold or listed its acquisitions faster than the others, thus featuring as only a short chapter in the history of its target companies.