How investment bankers, specially LBO players, shape their ideal company in our capitalist world!

6/24/20241 min read

In my tenure as a Managing Partner at a big private equity fund, I've been thrust into the heart of a cutthroat industry that operates with ruthless efficiency:

We commence with leveraged buyouts, leveraging debt from 40-60% to seize control.

Upon acquisition, we swiftly transfer the burden of debt onto the company's shoulders.

To 'add value,' we assemble a squad of corporate mercenaries—CEOs, CFOs, and execs—seasoned in the art of ruthless profit maximization, hell-bent on squeezing every last drop of EBITDA.

Then follows the brutal onslaught of downsizing—mass layoffs, wage slashes, benefit terminations, and offshore outsourcing—leaving the workforce decimated and morale shattered.

With EBITDA as our holy grail, we diligently divert it to repay the monstrous debt we've shackled the company with.

But why halt there? We plunge headlong into frenzied M&A, stacking on more debt, heaping it onto the company's already strained balance sheet.

After a mere four to five years, it's time to make our exit, leaving behind a hollowed-out shell of a company drowning in debt, a mere shadow of its former glory.

While the private equity juggernauts rake in billions, our hired guns—the CEOs and their elite cadre—exit with obscene paychecks ranging from €20 to €55 million.

The casualties of this high-stakes game? The forgotten masses of employees, devoid of stock options, and the once-prosperous businesses now teetering on the brink of collapse.

What was once met with skepticism now fills me with visceral shock as I confront the stark realities of this ruthless industry. The moral quandaries run deep, leaving me grappling with my own complicity in this merciless game.