I am French and was looking for a deep explanation of private equity in French language (as I don't really master English). Watched your video and found out that I understood better your explanation in English than 100 French websites I read. THANK YOU SO MUCH !!
While many private equity fund managers are ethical, Steve Feinberg's private equity fund is what caused school teacher retirement money to bankroll U.S. black rifle manufacturers. It was his company that made the Newtown gun.
No doubts , A good way of growing and saving your money is through investing . You don't need to have much before you can invest. "That little money you have now can make you millions if you invest it wisely". I wasnt financial free until my 40’s and I’m still in my 40’s, bought my second house already, earn on a monthly through passive income and got 4 out of 5 goals, just hope it encourages someone that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing is a grand choice I made.
@Alexed Martin She is easy to find , make a quick research of her on the internet with her name Regina Louise Collaro and leave her a message .She works with anyone independent of their location.
@@vicahmed221 You are right, I am one of many who has benefited from investing with Regina Louise Collaro. 2020 is an unforgettable year in my life, back then I lost my job due to covid and had no reason to live. Regina made a good life possible for me through passive income and I owe her my life. To be honest, I feel like she is an angel of who was sent to help those who are suffering financially
@@STEV0-o3e hey young man I'ma teach you a quick strategy I want you to go get a job for five years put 10% of your money into the 401K think about 401ks as a retirement fund the only way you can get that money is if you turn 65 or if you leave the company the reason why you want to put 10% in there because some companies will match you anywhere from 3% to 10% on the money that you put and it that grows over time so that's free money you get on top of the money you're saving so let's say you're 20 years old you live with your parents to you 25 you put 10% of your income in the 401K they match it 4 or 5% let's say around five years your fund has $30,000 now before you get excited you got to pay the federal they take about 10 to 20% you have to pay the state they take about another 10% so that's that leaves you with 25,000 now you can learn how to invest in that five years of working with your job find another job take that 25,000 and invest it appropriately and you can retire by 30 if you made the right investment choices that's just one way hope this helps you go get them I believe in you the reason why you do this because you need money to invest this is a way to get Capital without having to borrow
Why oh why are there always these shitty fake cyber conversations about some 'investment advisor' who is really great and, oh, here's her name etc??? Can't we all see that this is some kind of scam????
The bank don't just lend the 9 million away like that. The idea behind LBO is to use the cash generated by the target company to to repay the debt taken. The aquirer typically uses the assets of the target company as collateral.
Not all income investments are created equally. I've allocated my capital in a safe and sustainable way but still leave room for excitement for individual stocks, cryptos and new exciting opportunities!
@Joe Robert. I firmly believe everyone striving for financial independence should own both stocks and real estate. The percentage weighting of each asset class as part of your portfolio will then be up to you to decide. At least with stocks, when the market is plunging, you can sell, albeit at a loss. Lots of people couldn't sell their real estate, couldn't afford to sell in 2007-2011.
I'm confused as to why they're able to sell the property for twice the buy value when they've sold off half the land and torn down buildings. Wouldn't it be worth less if there were less grounds and fewer buildings?
Join Illuminati lodge today to gain limitless wealth and power. If you're ready to join Illuminati lodge headquarters in the USA today. Kindly inbox Agent Mr, Richard Hahn on whats-app mobile now or call (+12133573827). Warning you must be above 18 years of age. "Fear Not! "We are always watching out for you" Hail the light.
A hedge fund is not a private equity. You are completely wrong. VC is PE. Hedge funds, PE, etc are considered alternative assets but hedge fund does not belong under private equity
PE can also initiate an IPO on the share market, purchase heaps of shares thereby driving up the price of the shares. From there they entice others to buy the shares and when the company reaches over priced levels, the PE investors sell the shares to those who are still buying, make huge profits and walk away from the investment. Those who are left, lose their investment as the value of the company collaspes. This is a ruthless investment scheme that causes huge job losses and economic disruption. This is what happened to Dick Smith.
Thanks for this amazing information !! If you don't find a means of multiplying money, you will wake up one day to realize that the money you thought you had, has finished. Investment is key, I pray that anyone who reads this will be successful in life
Thank you for this... As someone that is going into healthcare I better understand this now.. .. im third year pre-med and hoping to have a private practice to not have to directly deal with being in the hospital so much.
Saw video of guy asking people who owned sports what they do for a living and this was one of their answers. So here i am on my way to owning a sports car. lol
Great breakdown of private equity! I've also explored how rare artifacts and fine wine are part of the ultra-rich’s secret investments. They’re fascinating because they combine passion with serious returns. Thanks for shedding light on this!
How about the private equity firm employees or wtf they are called do the actual work, labor, jobs of the companies that they acquire >50% ownership in, support unions of those workers, etc and then - only after all that - at the end - if they make a profit - exit.
He left out the part where the new owners cause the acquired company to borrow tons of money which magically ends up in the equity partners pockets while the offloaded company ends up a debt-ridden shell of what it was, with half its employees fired and the rest to follow sooner rather than later
I can understand when a manager decides to take short-term profit the compromise long-term results, such as not doing any maintenance or for going any security measures. It may increase short term returns at the cost of long term sustainability. However, I didn't understand how they expect to sell for a higher price what they bought and Stripped away some value from it
You missed the Reagan/Romney PE corporate where they barrow from the pension fund to pay the investor 38% interest and often the local bank till they're depleted the company to near ruin...
"Sahand119" said this video was an excellent explanation of what private equity is. Well, it is a good explanation of only one sector (leveraged buyouts) of private equity. So it is a very limited and negative-even cynical-explanation. Private equity is a core powerhouse of the U.S. economy and we would not have companies like Apple and Google and thousands more if it were not for private equity companies that risked their money and gambled on someone's idea. This is a very misleading video.
3:45: the pe is not ‘investing in a co that goes bust’. The pe is MAKING the co go bust and sucking out as much money as it can before leaving workers with nothing.
PE isn't limited to LBO. LBO is an option when the PE guys conclude the the target company has a number of assets that they can sell of as or use as collateral to repay the loan. PE are more concerned with restructuring the company and management. brilliant explanation though.
That was very good -- EXCEPT; What has BEEN happening with mutual funds, pensions and MORE -SO CALLED "professional" people who WORK for the investment side of YOUR pension is the FOLLOWING; Since this IS PRIVATE equity investing pensions and others -- HAVE -- invested in companies that give VERY high DIVIDENDS in return for the pensions money-- now pensions get a "so called" GUARANTEED dividend RETURN to HELP make it easier for pensions to make investment goal RETURNS. The BIG PROBLEM is; The HIGH dividend is GIVEN for a BAD REASON--- the company is a SERIOUS "JUNK" status debt company -- MEANING -- THE MAJORITY of BANKS and OTHER lending institutions --- WON'T RISK their MONEY on lending this BAD company --- ANY MONEY--- NONE! The Company-- KNOWS they have a "junk" status rating and a BIG, BIG, PROBLEM raising CREDIT lines and LOANS to STAY in BUSINESS! So--- they CAN'T get MONEY from NORMAL "LENDING institutions-- thus they go to ---- PRIVATE LENDERS-- PROMISE a VERY HIGH interest rate on the money THEY BORROW! The PENSION( the lender) DOES DO-- the due diligence -- but KNOWS the RISK of DEFAULT on the money -they LEND( YOUR ---- MONEY!!!) is VERY HIGH! Pension lenders and others, DECIDE--- if they lend and the default happens -- they have ownership of the DEFUNCT company and they just SELL the pieces( as described in the video). The BIG problem is the LACK of being ABLE to KNOW with ANY certainty--- the LENDER ( pensions and other lenders) --- will they GET ALL their money back on the SALE of the pieces! The BIGGER sharks, Goldman and JP Morgans-- just sit-- REFUSE to make ANY offer and wait and wait-- until NOW -- the lender CAVES in as they NEED to get a CERTAIN amount BACK to keep from just losing -- BIG MONEY! The Big sharks wait until the deal IS ON THEIR TERMS! The PENSIONS and others who ALL TOOK risk for the BIG dividend--- now SELL -- for PENNIES on EVERY dollar they gave AS PRIVATE Equity Lenders! To make this WORSE-- there is NO recourse for pension holders or other mutual fund holders AND ANNUITY holders as the FIDUCIARY responsibility is NOT applicable and they CHOSE the risk! JUST another reason to REMEMBER--- this is YOUR--- PRIVATE DEAL -- NO insurance, NO SEC -- to file charges! ALL you have is the PROPERTY or parts of the business( described in the video). The POSSIBLE BUYERS of YOUR --- PRIVATE DEAL --- ALL --- KNOW THIS(the Goldmans a nd JP Morgans)!!! AFTER 2008 crash --- there are A LOT of companies -- just TREADING WATER and DON'T QUALIFY for ANY bank loans. This has become a BIG business because of this! The TERM --- "JUNK BOND" -- is NOT applied -- for NO REASON! The -- EXTREME HIGH --- Dividend PAYERS --- "TOO GOOD TO BE TRUE" statement APPLIES--- the EXTREME high DIVIDEND is BAIT for investors!
You skipped the part where private equity doesn't actually make improvements to the asset. Instead, they strip it for liquidity, use that cash infusion to pay off the bank, then try to sell off the unsustainable husk of a company to a gullible buyer for an extra cash-out.
Thank for expand , working in K. K. R. Capital before still not really sure they spend lot of $€£ , however silver lake and T.P.G is the most competitive P.E. firm
So 10 P.E. investors pool together $1M, or $100k each, leverage a property purchase of $10M, sell for double that $20M and take the $10M profit. Each of the PE investors would get back around $1M profit, literally 10x their personal investment. No wonder why I hear so many wealthy people say they're "in private equity."
Your description is so dated - you are stuck in Barbarians at the Gate. PE has evolved and there are much fewer PE companies that do what you describe (overleverage, asset strip, cost cut, sell or fail). Of course PE is in part about capital efficiency but without improved performance (growth) average returns usually disappoint.
how do private equity funds underwrite and calculate every investment? meaning, what exactly are the sheets or instruments they use to calculate IRR, Equity Multiples, Cash flows, and overall underwrite and project for every fund?
I'm not a private equity expert, (although I'm in finance) but I assume private equity firms looks at the main financial statements (Income Statement, Balance Sheet, Statement of Cash Flows) in order to evaluate the health and growth prospects of a company. They probably vary as private equity firms are not working with public companies, but I assume that's what they look at.
so, the part I never understood: the company was bad in the first place, a staff layoff and cosmetic makeover takes place, and *that's* enough to make it attractive again and re-sold for more than it was bought for? What's the added value? Why the company bought again? Isn't it obvious to the final buyers that that the company is only profitable short-term because cuts have been made, that it's not on solid ground?
Why would they care if the company is only profitable in the short term after their changes? They are selling it to some other dupe and taking the profit with them. They don't care about making jobs, a sustainable company, or with the house metaphor even a great place to live. They care about making the business look great and profitable in the short term so they can cash out. Much like flipping houses, a lot of times what PE does is putting in shoddy surface level improvements while cutting as many corners as possible so the person who tours it thinks it looks great and buys it at much more than it is worth. The new owners will have to deal with the shoddy duct tape foundation, termites, and the poorly installed granite and flooring. As for the buyers often PE sells the stripped down company to other PE looking to do the same. Or they sell it to the direct competitors of the company which are less invested in making a good company than buying out the competition and securing their market share. They also might sell it to an unsuspecting public.
Great words thanks sir. I have a question . Do these bunch of friends who bring £1million need to form a company or something else plz say few words once. Again I really appreciate your help with this. :)
Surely the bank would want the PE Fund to kick up more than 10% of the purchase price?! Especially when the interest on it is not serviced but deferred and paid back on a wholly accrued basis together with the principal upon exit in the agreed timeframe?!
Love the explanation. Ever heard of Immersive Translate?? It is a tool with meticulously crafted prompts, that allows translations in the technology field become more accurate and professional.
Yeah its great business, but in the end, it is just making more money. The problem with the system is that money itself has no real value. It has a perceived value that is based on a ton of countless factors. But what happens when the money is no longer worth the paper it is printed on? Oh right BAD SHIT.
So basically you need a hell amount of investment in order to acquire a running business which is somehow not running great by any means. We need to fix it up and manage it for 5-10 years before flipping it right? But can you tell me will the investors be getting monthly salary or income or interest from the entire investment they did to acquire the business.
Sounds like the people who would benefit most would be monopolists who want to get rid of competition without triggering an antitrust action.
oh, kinda like live nation
My learning style is aligned with your delivery. Really enjoyed this.
Saw a lot of luxury car owners say they do this.
Lol tiktok?.Me tooo hahaha
Same
Sameeee 😂😂
LoooL 😂😂😂 i camr from tik tok
Same
The most direct and easiest way to understand about PE!
Workers MUST own and control the means of production.
Marxist doesn't work in the modern world. Marx did a shit job at predicting technology.
They can. It’s called "being a shareholder"...
@@Chimichanga5666 the workers won't ever own enough shares to influence decision-making.
De Niro teaching us is a blessing.
Been seeing those tik toks about people doing this for a living..... let me try and learn something real quick
Yoo fr 😭‼️
lol me 2
the person that has a Lambo by selling drugs is a king lol
LOLL same
Lmaoooo
They don't 'streamline'. They strip and load the company with debt.
Beautifully explained, the power of art shines forth once again
What do you look like today.
This was 12 years ago.. Time is something crazy… So cool to look back on these videos as if they were yesterday..
I kno can't be the only one here from TikTok
Yeaaaa you got me there
Yep saw a few people with nice cars saying they were into private equity. Came here to learn what is was 📝
Nah bro
Lol
It’s parasitic and harmful
I am French and was looking for a deep explanation of private equity in French language (as I don't really master English). Watched your video and found out that I understood better your explanation in English than 100 French websites I read. THANK YOU SO MUCH !!
baby girl.. your English is sweet. I dont speak French.. but I DO kiss that way. ))
If you are french, I am Swedish
@@dissmr 🤌
bonjour
While many private equity fund managers are ethical, Steve Feinberg's private equity fund is what caused school teacher retirement money to bankroll U.S. black rifle manufacturers. It was his company that made the Newtown gun.
i have developed an interest in this private equity topic and you have really helped me understand what they are all about thanks
No doubts , A good way of growing and saving your money is through investing . You don't need to have much before you can invest. "That little money you have now can make you millions if you invest it wisely". I wasnt financial free until my 40’s and I’m still in my 40’s, bought my second house already, earn on a monthly through passive income and got 4 out of 5 goals, just hope it encourages someone that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing is a grand choice I made.
@Alexed Martin She is easy to find , make a quick research of her on the internet with her name Regina Louise Collaro and leave her a message .She works with anyone independent of their location.
@@vicahmed221 You are right, I am one of many who has benefited from investing with Regina Louise Collaro. 2020 is an unforgettable year in my life, back then I lost my job due to covid and had no reason to live. Regina made a good life possible for me through passive income and I owe her my life. To be honest, I feel like she is an angel of who was sent to help those who are suffering financially
I am 15 years old what would you tell a young kid like me to do so I can retire before 30. Thanks
@@STEV0-o3e hey young man I'ma teach you a quick strategy I want you to go get a job for five years put 10% of your money into the 401K think about 401ks as a retirement fund the only way you can get that money is if you turn 65 or if you leave the company the reason why you want to put 10% in there because some companies will match you anywhere from 3% to 10% on the money that you put and it that grows over time so that's free money you get on top of the money you're saving so let's say you're 20 years old you live with your parents to you 25 you put 10% of your income in the 401K they match it 4 or 5% let's say around five years your fund has $30,000 now before you get excited you got to pay the federal they take about 10 to 20% you have to pay the state they take about another 10% so that's that leaves you with 25,000 now you can learn how to invest in that five years of working with your job find another job take that 25,000 and invest it appropriately and you can retire by 30 if you made the right investment choices that's just one way hope this helps you go get them I believe in you the reason why you do this because you need money to invest this is a way to get Capital without having to borrow
Why oh why are there always these shitty fake cyber conversations about some 'investment advisor' who is really great and, oh, here's her name etc??? Can't we all see that this is some kind of scam????
Fantastic presentation! Very easy to follow! Thank you.
The bank don't just lend the 9 million away like that. The idea behind LBO is to use the cash generated by the target company to to repay the debt taken. The aquirer typically uses the assets of the target company as collateral.
That's true of any bank loan. It didn't need to be stated
He literally says this in the first 2 minutes, bozo
Yo moma is a bozo for having you @@milkmessiah5192
The “leaves all of us needing a drink” at the end was funny asf
Not all income investments are created
equally. I've allocated my capital in a safe and sustainable way but still leave room for excitement for individual stocks, cryptos and new exciting opportunities!
@Joe Robert. I firmly believe everyone striving for financial independence should own both stocks and real estate. The percentage weighting of each asset class as part of your portfolio will then be up to you to decide. At least with stocks, when the market is plunging, you can sell, albeit at a loss. Lots of people couldn't sell their real estate, couldn't afford to sell in 2007-2011.
@Sean Roger I'm aware of Frost Hilda, how long
has he been handling all these investments and
how has he enhanced your earnings?
Not every is able to identify lucrative positions to earn from
@Sean Roger dn
I'm confused as to why they're able to sell the property for twice the buy value when they've sold off half the land and torn down buildings. Wouldn't it be worth less if there were less grounds and fewer buildings?
Amazing video. First guy I've seen that explains what the "Private" and what the "equity" means!
This is really well explained
I couldn’t understand this until I watched this video. Good job👍🏼
Well presented, simple and straight forward. Thank you
How am I just finding this channel? You are brilliant.
yes, this seems to be a good channel. I found it now too. also, check out my channel as well :)
I loved these videos. I was kinda confused when the first clip ended. Then I loved it after the second video ended with a drink.
Join Illuminati lodge today to gain limitless wealth and power. If you're ready to join Illuminati lodge headquarters in the USA today. Kindly inbox Agent Mr, Richard Hahn on whats-app mobile now or call (+12133573827).
Warning you must be above 18 years of age.
"Fear Not! "We are always watching out for you" Hail the light.
PE fund is not a synonyme for LBO fund. What you're talking about is a Buyout fund. PE is an umbrella term that includes VC, FoF, hedge funds etc.
A hedge fund is not a private equity. You are completely wrong. VC is PE. Hedge funds, PE, etc are considered alternative assets but hedge fund does not belong under private equity
@@toomanyfrogs6702 yup, but even then, some LPs like to separate out VC from their PE book
best teacher on yt
PE can also initiate an IPO on the share market, purchase heaps of shares thereby driving up the price of the shares. From there they entice others to buy the shares and when the company reaches over priced levels, the PE investors sell the shares to those who are still buying, make huge profits and walk away from the investment. Those who are left, lose their investment as the value of the company collaspes. This is a ruthless investment scheme that causes huge job losses and economic disruption. This is what happened to Dick Smith.
This is NOT what PE funds do. Fuck, you really are stupid.
The majority of PE deals are not public companies.
That’s really fucking illegal 😂😂
Thanks for this amazing information !! If you don't find a means of multiplying money, you will wake up one day to realize that the money you thought you had, has finished. Investment is key, I pray that anyone who reads this will be successful in life
Asset stripping, privatising gains and socialising losses
you make it very easy to unedrstand - well done. i'm sure the PE Funds would rather maintain the mysticism around what they do!
Thank you for this... As someone that is going into healthcare I better understand this now.. .. im third year pre-med and hoping to have a private practice to not have to directly deal with being in the hospital so much.
Saw video of guy asking people who owned sports what they do for a living and this was one of their answers. So here i am on my way to owning a sports car. lol
best teacher ever
Great breakdown of private equity! I've also explored how rare artifacts and fine wine are part of the ultra-rich’s secret investments. They’re fascinating because they combine passion with serious returns. Thanks for shedding light on this!
How about the private equity firm employees or wtf they are called do the actual work, labor, jobs of the companies that they acquire >50% ownership in, support unions of those workers, etc and then - only after all that - at the end - if they make a profit - exit.
Excellent explanation
So, legal criminality
He left out the part where the new owners cause the acquired company to borrow tons of money which magically ends up in the equity partners pockets while the offloaded company ends up a debt-ridden shell of what it was, with half its employees fired and the rest to follow sooner rather than later
Right to the point! 😊 Why do they 'streamline' the acreage? Do they sell it separately?
I never get tired of the punch line at the end !
But how is the stripped down business now worth 20MM? Are the parts worth more than the whole?
I can understand when a manager decides to take short-term profit the compromise long-term results, such as not doing any maintenance or for going any security measures.
It may increase short term returns at the cost of long term sustainability.
However, I didn't understand how they expect to sell for a higher price what they bought and Stripped away some value from it
What do you do for a living??
Pilfering
TIK TOK BROUGHT ME HERE! Man I've been wasting my f*cking life studying some other bullsh*t. I wish I knew this 10 years ago.
What will you do when y’all run out of every good company to leech off of
Warren Buffet had a very good, very short description of private equity: close to fraud.
Thank you, Sensei!!
So good! Really enjoyed your explanation!
You missed the Reagan/Romney PE corporate where they barrow from the pension fund to pay the investor 38% interest and often the local bank till they're depleted the company to near ruin...
Is this the same with cars, planes and boats and luxury items
"Sahand119" said this video was an excellent explanation of what private equity is. Well, it is a good explanation of only one sector (leveraged buyouts) of private equity. So it is a very limited and negative-even cynical-explanation. Private equity is a core powerhouse of the U.S. economy and we would not have companies like Apple and Google and thousands more if it were not for private equity companies that risked their money and gambled on someone's idea. This is a very misleading video.
This was a really good explanation, thank you!
Now here's some scummy details he left out: ua-cam.com/video/VUS8R3HzJY8/v-deo.html
3:45: the pe is not ‘investing in a co that goes bust’. The pe is MAKING the co go bust and sucking out as much money as it can before leaving workers with nothing.
PE isn't limited to LBO. LBO is an option when the PE guys conclude the the target company has a number of assets that they can sell of as or use as collateral to repay the loan. PE are more concerned with restructuring the company and management. brilliant explanation though.
WRONG!
Every private equity deal is an LBO as you will never buy a company with all equity or the returns will be too low and the GP wont get carry
That was very good -- EXCEPT;
What has BEEN happening with mutual funds, pensions and MORE -SO CALLED "professional" people who WORK for the investment side of YOUR pension is the FOLLOWING;
Since this IS PRIVATE equity investing pensions and others -- HAVE -- invested in companies that give VERY high DIVIDENDS in return for the pensions money-- now pensions get a "so called" GUARANTEED dividend RETURN to HELP make it easier for pensions to make investment goal RETURNS.
The BIG PROBLEM is; The HIGH dividend is GIVEN for a BAD REASON--- the company is a SERIOUS "JUNK" status debt company -- MEANING -- THE MAJORITY of BANKS and OTHER lending institutions --- WON'T RISK their MONEY on lending this BAD company --- ANY MONEY--- NONE!
The Company-- KNOWS they have a "junk" status rating and a BIG, BIG, PROBLEM raising CREDIT lines and LOANS to STAY in BUSINESS!
So--- they CAN'T get MONEY from NORMAL "LENDING institutions-- thus they go to ---- PRIVATE LENDERS-- PROMISE a VERY HIGH interest rate on the money THEY BORROW!
The PENSION( the lender) DOES DO-- the due diligence -- but KNOWS the RISK of DEFAULT on the money -they LEND( YOUR ---- MONEY!!!) is VERY HIGH! Pension lenders and others,
DECIDE--- if they lend and the default happens -- they have ownership of the DEFUNCT company and they just SELL the pieces( as described in the video).
The BIG problem is the LACK of being ABLE to KNOW with ANY certainty--- the LENDER ( pensions and other lenders) --- will they GET ALL their money back on the SALE of the pieces!
The BIGGER sharks, Goldman and JP Morgans-- just sit-- REFUSE to make ANY offer and wait and wait-- until NOW -- the lender CAVES in as they NEED to get a CERTAIN amount BACK to keep from
just losing -- BIG MONEY!
The Big sharks wait until the deal IS ON THEIR TERMS!
The PENSIONS and others who ALL TOOK risk for the BIG dividend--- now SELL -- for PENNIES on EVERY dollar they gave AS PRIVATE Equity Lenders!
To make this WORSE-- there is NO recourse for pension holders or other mutual fund holders AND ANNUITY holders as the FIDUCIARY responsibility is NOT applicable and they CHOSE the risk! JUST another reason to REMEMBER--- this is YOUR--- PRIVATE DEAL -- NO insurance, NO SEC -- to file charges! ALL you have is the PROPERTY or parts of the business( described in the video).
The POSSIBLE BUYERS of YOUR --- PRIVATE DEAL --- ALL --- KNOW THIS(the Goldmans a nd JP Morgans)!!!
AFTER 2008 crash --- there are A LOT of companies -- just TREADING WATER and DON'T QUALIFY for ANY bank loans. This has become a BIG business because of this!
The TERM --- "JUNK BOND" -- is NOT applied -- for NO REASON!
The -- EXTREME HIGH --- Dividend PAYERS --- "TOO GOOD TO BE TRUE" statement APPLIES--- the EXTREME high DIVIDEND is BAIT for investors!
You the best , this has just explained my curiosity on what is this PE .
Nice Video! Thanks for explaining!
But this explanation was flawless.
As I understand pe activities, the pe entity doesnt pay any loan that was taken out to buy the co or property. The pe forces the co to pay it.
That was really easy to understand and assimilate, thank you :)
If you can explain something complex in simple terms then you truly understand it!! Enjoyed watching your video!! 😎
Came here from tiktok
I dont know why nobody mentioned it.....but this guy is realllllllyyyy good looking....
This leaves all of us needing a drink period.
You skipped the part where private equity doesn't actually make improvements to the asset. Instead, they strip it for liquidity, use that cash infusion to pay off the bank, then try to sell off the unsustainable husk of a company to a gullible buyer for an extra cash-out.
Thanks prof! But this's simple model!
(leveraged buyouts, venture capital, growth capital, distressed investments)
So basically if you don't sell or flip .... You would be in debt to the bank. There are others ways to service the debt
Perfect explanation except the Part of private Equity firms taking a loss
Thank for expand , working in K. K. R. Capital before still not really sure they spend lot of $€£ , however silver lake and T.P.G is the most competitive P.E. firm
Great explanation! Thank you!
You forgot the bit when the house collapses five years after it is flipped because the PE guys sold off the load-bearing walls.
How does the bank just lend them that much money??? What if the PE investment fails to achieve good returns?
Mostly likely they put the asset as collateral if they failed to pay back the loan + interest
How does the bank lend mortgages to random people for 20+ years? Leveraging up 10x EBITDA is alot less dangerous than lending to people at 30x income
Thank you so much for the video. I want to learn more
Private equity can be destructive for everyone involved but the investors.
Very good and clear explanation.. Thank youuu..
So 10 P.E. investors pool together $1M, or $100k each, leverage a property purchase of $10M, sell for double that $20M and take the $10M profit. Each of the PE investors would get back around $1M profit, literally 10x their personal investment. No wonder why I hear so many wealthy people say they're "in private equity."
Your description is so dated - you are stuck in Barbarians at the Gate. PE has evolved and there are much fewer PE companies that do what you describe (overleverage, asset strip, cost cut, sell or fail). Of course PE is in part about capital efficiency but without improved performance (growth) average returns usually disappoint.
there is a role of securitising the accounts receivables to fund the buyout ..
Great concept, great video.
Excellent job 👏
Greatly explained
Thanks my guy.......very well explained
how do private equity funds underwrite and calculate every investment? meaning, what exactly are the sheets or instruments they use to calculate IRR, Equity Multiples, Cash flows, and overall underwrite and project for every fund?
I'm not a private equity expert, (although I'm in finance) but I assume private equity firms looks at the main financial statements (Income Statement, Balance Sheet, Statement of Cash Flows) in order to evaluate the health and growth prospects of a company. They probably vary as private equity firms are not working with public companies, but I assume that's what they look at.
so, the part I never understood: the company was bad in the first place, a staff layoff and cosmetic makeover takes place, and *that's* enough to make it attractive again and re-sold for more than it was bought for? What's the added value? Why the company bought again? Isn't it obvious to the final buyers that that the company is only profitable short-term because cuts have been made, that it's not on solid ground?
Why would they care if the company is only profitable in the short term after their changes? They are selling it to some other dupe and taking the profit with them. They don't care about making jobs, a sustainable company, or with the house metaphor even a great place to live. They care about making the business look great and profitable in the short term so they can cash out.
Much like flipping houses, a lot of times what PE does is putting in shoddy surface level improvements while cutting as many corners as possible so the person who tours it thinks it looks great and buys it at much more than it is worth. The new owners will have to deal with the shoddy duct tape foundation, termites, and the poorly installed granite and flooring.
As for the buyers often PE sells the stripped down company to other PE looking to do the same. Or they sell it to the direct competitors of the company which are less invested in making a good company than buying out the competition and securing their market share. They also might sell it to an unsuspecting public.
fantastic video...thank you very much
Great job thanks for the info.
Woow. Top explanation.
Great words thanks sir.
I have a question .
Do these bunch of friends who bring £1million need to form a company or something else plz say few words once. Again I really appreciate your help with this.
:)
Surely the bank would want the PE Fund to kick up more than 10% of the purchase price?! Especially when the interest on it is not serviced but deferred and paid back on a wholly accrued basis together with the principal upon exit in the agreed timeframe?!
Nkita ko sa tiktok, karamihan ng may luxury cars .. ang daily living nila ay private equity..
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Yeah its great business, but in the end, it is just making more money. The problem with the system is that money itself has no real value. It has a perceived value that is based on a ton of countless factors. But what happens when the money is no longer worth the paper it is printed on? Oh right BAD SHIT.
Brilliant explanation!!!
Very quick and easy explanation thanks!
Excellent
thank you so much for your v valuable explanation !! Where were u before !!
Thank you! Great information!
Super clear 👍
Excellent!!
If so many of these Private Equity firms leverage buy out of companies FAIL ( about 20%) then why do banks lend them the money?
So basically you need a hell amount of investment in order to acquire a running business which is somehow not running great by any means. We need to fix it up and manage it for 5-10 years before flipping it right? But can you tell me will the investors be getting monthly salary or income or interest from the entire investment they did to acquire the business.