The Debt Trap - Student Edition
How Leverage Impacts Private-Equity Performance
Paperback | 10 July 2017 | Edition Number 2
At a Glance
542 Pages
Student edition
16 x 4 x 3.5
Paperback
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orThrough 14 business stories, all emanating from the noughties' credit bubble and including headline-grabbing names like Caesars, Debenhams, EMI, Hertz, Seat Pagine Gialle and TXU, The Debt Trap shows how, via controversial practices like quick flips, repeat dividend recaps, heavy cost-cutting and asset-stripping, leveraged buyouts changed, for better or for worse, the way private companies are financed and managed today.
From technological disruption in the worlds of music recording and business-directory publishing to economic turbulence in the gambling, real estate and energy sectors, highly levered corporations are often incapable of handling market corrections when debt commitments start piling up. Behind the historical events and the financial empires erected by some of the elite private equity specialists, these 14 in-depth case studies examine how value-maximising techniques and a short-cut mentality can impact investment returns and portfolio assets.
Whether you are a PE practitioner, investor, business manager, academic or business student, you will find The Debt Trap to be an authoritative and fascinating account.
About the Author
Sebastien Canderle has more than 20 years of experience in the consulting and financial sectors in New York and London, including as an investor for various private equity firms. He is also the author of Private Equity's Public Distress, a book covering the impact of the financial crisis of 2008 on the buyout industry, and has been a contributor to several financial blogs as well as a business school lecturer in private equity.
Industry Reviews
"Private equity plays a crucial role in modern economies. What Sebastien Canderle explains is that the sector's performance depends on a very specific set of value triggers, first among them the optimal use of leverage. Get the mix wrong, however, and as the book's well-researched case studies demonstrate, even the most experienced fund managers can come to regret their foray into leveraged buyouts. The Debt Trap is filled with grounded analysis and is an authoritative book for PE practitioners and scholars alike." --- Franklin Allen, Nippon Life Professor of Finance and Economics at the Wharton School of the University of Pennsylvania, and Brevan Howard Centre director at Imperial College in London
"The Debt Trap dissects the dealmaking that undergirds leveraged buyouts and provides an essential road map to the many ways that this has changed since the 2008 financial crisis. Detailed examinations of high-profile buyouts demystify the excessively risky and opaque means that PE firms use to acquire companies."--- Eileen Appelbaum, Senior Economist at the Center for Economic and Policy Research, and author of Private Equity at Work
"Sebastien Canderle has written a genuinely compelling book that raises crucial questions about modern-day PE investment practices. The Debt Trap is a thoughtful and stimulating work that helps to frame the debate on value creation in the world of alternative finance."--- Pablo Fernandez, Professor of Financial Management and PricewaterhouseCoopers Chair of Corporate Finance at IESE Business School
"Not only does the book offer plenty of warning for private investors about investing in IPOs where the company floating is backed by a PE house, but also offers institutional investors plenty of evidence of what can go wrong with companies saddled with theexorbitant debt an LBO can bring...What I most like about this book is its broad scope in explaining the social effects of this kind of financial engineering." --- Owen Jones, Fidelity
"Sebastien Canderle's book should be at the top of recommended reading lists for every finance course. Drawing on a vast amount of research, The Debt Trap gives fascinating insights into some of the most illustrious leveraged buyouts, which will help to improve our teaching of finance and contribute to a sounder financial industry. For that reason it deserves to be read." --- Jacques Regniez, Professor of Economics and Finance at the State University of New York
"Private equity has thrived on debt. Excessive debt can harm companies. This important book shows how and why thanks to a rich set of in-depth case studies. It is essential reading for practitioners and students of private equity." --- Francois Degeorge, Senior Chair of the Swiss Finance Institute and Professor of Finance at the Universita della Svizzera italiana
"...The Debt Trap is a very valuable addition to the inordinately small body of literature on the subject of private equity...Canderle has opened the door for further investigation into the opaque world of private equity." -- Darragh Riordan, Real Deals
"A valuable contribution to the literature on private equity, The Debt Trap is an absorbing study of why leverage is a two-edged sword and should be used with utmost caution. The book is an important read for anyone involved in the private equity world or even the finance world at large." --- Jacob Wolinsky, CEO of ValueWalk
"Call it 'the art of the leveraged buyout'...Canderle explores some of the more controversial business strategies such as quick flips, repeat dividend recaps, heavy cost cutting, and asset stripping as related to leveraged buyouts...the author brings these investment strategies to life through real-world application--offering an up-close view of private equity deal-making. The text is a great resource for PE fund managers and business people alike." --- Wharton Magazine
Abbreviations and Lexicon
Introduction
Chapter 1. Tricks of the Trade
Part One. Asset-Shifting: Secondary Buyouts and their Offspring
Chapter 2. Gala Coral - Game on!
Part Two. Asset-Flipping: Recaps and Quick Flips, or the Art of Making a Quick Buck
Chapter 3. Hertz - The Need for Speed
Chapter 4. Celanese - Rich Chemistry
Part Three. Financial Engineering and the Risks Pyramid
Chapter 5. TXU - Power Struggles
Chapter 6. EMI - Out of Tune
Part Four. Repurchases or Relapse Buyouts: Seller's Remorse
Chapter 7. PHS - Washed-up
Chapter 8. Frans Bonhomme - Down the Drain
Part Five. Listing, Delisting, Relisting: On a Fool's Errand
Chapter 9. DX Group - Going Postal
Chapter 10. Debenhams - Debt Never Goes Out Of Fashion
Part Six. Private Investments in Public Equity: PIPE Dream or Nightmare?
Chapter 11. PagesJaunes - The French Disconnection
Chapter 12. Seat Pagine Gialle - The Italian JobPart Seven. PE-backed IPOs: The Search for a Patsy
Chapter 13. eDreams - Reality Fights Back
Chapter 14. Foxtons - Timing the MarketPart Eight. Asset-Stripping: Modern-day Creative Destruction
Chapter 15. Caesars Entertainment - PE's Version of Strip Poker
Part Nine. Trick or TreatEpilogue. Sheriffs and Cowboys
Acknowledgements
About the author
Endnotes
Index
ISBN: 9780857196415
ISBN-10: 0857196413
Published: 10th July 2017
Format: Paperback
Language: English
Number of Pages: 542
Audience: College, Tertiary and University
Publisher: HARRIMAN HOUSE LTD
Country of Publication: GB
Edition Number: 2
Edition Type: Student edition
Dimensions (cm): 16 x 4 x 3.5
Weight (kg): 0.83
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