In a shocking move, Optiv, a cybersecurity company, has left its headquarters in downtown Denver, Colorado, and relocated to Leawood, Kansas. But is this a case of Colorado losing a valuable business, or is it a symptom of a larger issue? This episode delves into the world of leveraged buyouts, where private equity firms use borrowed money to buy companies, often leaving them with crippling debt and a high risk of bankruptcy.
The speaker discusses the case of Optiv, which was bought by a private equity firm, KKR, in 2017. The company's debt ballooned, and it was forced to sublease office space and lay off employees. But this is not an isolated incident - the speaker reveals that many companies have fallen victim to leveraged buyouts, including Toys R Us, Saks, and Forever 21. The numbers are staggering, with private equity-owned firms accounting for almost half of the largest bankruptcies in the country.
The speaker argues that the problem lies not just with the companies themselves, but with the system that allows private equity firms to use borrowed money to pay themselves dividends and advisory fees, while the companies struggle to stay afloat. The speaker also highlights the role of public pension systems, which invest in these firms and often fail to demand better terms.
If you're interested in learning more about the complex world of leveraged buyouts and how they're affecting businesses and communities, tune in to this episode to hear the speaker's insightful analysis and discussion of the issues at play.
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