Tuesday, January 2, 2018

U.S. retail’s turbulent relationship with private equity


Toys R Us was one of the largest retailers bought by private equity groups as investors poured cash into the sector. But after a string of successes in the early part of the century, retail turned turbulent. More than half of the largest leveraged retail buyouts completed since 2007 have either defaulted, gone bankrupt or are in distress, according to a Financial Times analysis.

“It’s safe to say that nobody in the rooms at the time those deals were being done was even close to predicting how quickly business would move online, how formidable Amazon would become, or just how expensive it would be for traditional retailers to transform their businesses,” says Joel Bines, managing director of AlixPartners, a consultancy. “It’s been rapid and dramatic.”. . . more