Look at the Bain 2020 annual “private equity” report. Back of the envelope math, at 10x purchase price and 7x leverage, 10 to 15% of revenue goes to debt coverage costs and a 5% revenue decline triggers the bank covenants and causes a technical default. It’s the executives fault that happened?
Maybe it is, but the capital structure and the operating team are separate and distinct things.
It’s also important to consider, if the bank debt can’t convert to equity via a ch11, then overall availability of capital will sharply decrease. Which in turn hurts every business around.
Maybe it is, but the capital structure and the operating team are separate and distinct things.
It’s also important to consider, if the bank debt can’t convert to equity via a ch11, then overall availability of capital will sharply decrease. Which in turn hurts every business around.