Private Equity’s Trail of Bankrupt Retailers

It’s no secret that the retail industry is struggling. Though the Standard & Poor’s 500 stock index gained 19.6 percent year-over-year through mid-September, the S&P Retail Select Industry Index fell 4.75 percent over the same period.

For the latest example of the retail industry’s troubles, look to Toys “R” Us. The iconic toy retailer, once the top player in its category, filed for Chapter 11 bankruptcy in the Richmond Division of the U.S. Bankruptcy Court, Eastern District of Virginia, on September 18. But Toys “R” Us wasn’t pushed into court because of terrible sales — it recorded nearly $1 billion in online sales in 2016, according to a spokesperson, and had earnings before interest, taxes, depreciation, and amortization of $792 million. Rather, the company was struggling to pay down its staggering debt load — for which it could thank its 2005 leveraged buyout. Bain Capital Private Equity and KKR & Co. teamed up with real estate investment trust Vornado Realty Trust to acquire the company for approximately $6.6 billion, including $5.3 billion of debt secured by the company’s assets.

玩具“r”我们远离第一家私人股权买断后发现自己陷入困境。近年来，私募股权公司已连接到零售破产的皮疹，包括Gymboree，无需鞋子，有限的商店和真正的宗教服装等。

“一些倒塌的零售商是私募股权，”美国收购的作者Josh Kosman说：私募股权如何导致下一个巨大的信贷危机。“我认为这不符合巧合。该模型设置为不适应更改。“

To be sure, the retail industry faces a powerful headwind in e-commerce competitors, which have been crushing brick-and-mortar retailers in part because of their lower costs of operation.

Amazon is king among investors, who are flocking away from mall brands en masse. “Amazon is kicking a lot of people’s asses,” says Peter Wilson, London-based managing director at private equity investment firm HarbourVest Partners, where he co-leads secondary investments in Europe.

但是，一些私募股权批评者认为，通过向他们的投资组合中丧失债务，贝恩和kkr等私募股权公司正在使零售商与亚马逊保持更加困难，驾驶几个宣布破产。

“The private-equity model doesn’t lend itself to change,” says Kosman. “They expect things to stay the same.”

In other words, these firms don’t expect valuations to depreciate over the five to ten years that they own assets. And yet, the retail industry is rife with disrupters, with everyone from Amazon to Wal-Mart vying to get a piece of the customer’s wallet.

科斯曼指出，许多私募股权公司预计持有一家公司仅需五年。在互联网的早期，许多公司认为他们可以在电子商务上滞后，因为当销售网上产品变得至高无上时，他们不再拥有公司。

For its part, Toys “R” Us blamed its over-leveraged status on the fact that it couldn’t pay for the changes customers came to expect from the industry. According to the store’s bankruptcy filing, Toys “R” Us had fallen behind its competitors when it came to “general upkeep and the condition of our stores, our inability to provide expedited shipping options and our lack of a subscription-based delivery service.” Meanwhile, it was paying $400 million a year in interest on its debt. Bain, KKR and Vornado declined comment on the store’s bankruptcy.

This is not the first time a toy retailer has declared bankruptcy following a buyout. Bain acquired KB Toys back in 2000, then the second-largest toy retailer. Just four years later KB filed for Chapter 11 bankruptcy, after Wal-Mart began cutting its toy prices to get more customers in the door. Though this wasn’t the death knell for KB — that came in 2008, when the store filed for bankruptcy a second time and closed down — it was a push toward the grave, critics say.

根据科斯曼的说法，除了拒绝在国际上拒绝成长商店的存在之外，贝恩举行了股票。玩具“r”我们，贝恩似乎已经吸取了课程。它并没有在收购时股息，并且将玩具“r”在全球范围内。此外，Bain推动了玩具“R”我们专注于电子商务。

But when it came to Toys “R” Us, Bain and its partners failed to recognize that yet another innovative player was taking control of the retail industry.

“我认为这实际上是同样的错误，”科斯曼说。“这是一个非常相似的竞争对手，你没想到，”他补充道。“由于所有的债务，你不能跟上。”

贝恩发言人指出，公司的一些投资是成功的，包括收购加拿大鹅控股以及该公司随后的IPO。

一些投资专业人士认为，零售业的性质使其易于破产。

“零售是一种企业，相对于其他行业，相当于现金需要，”威尔逊的Harbourcort同事解释了约翰多梅，他们专注于二次投资，并位于公司的波士顿办事处。“如果你遇到流动性问题，零售商可以在一夜之间放松一下。”

事实上，许多零售商迅速申请第11章保护，以便在剩余业务的同时重组财务。破产申请只是让他们消除债务并重组。这是玩具“r”我们希望实现。与此同时，kkr和vornado将其股份的价值削减了玩具“r”我们到零。

For their part, private equity firms seem to be growing weary of the difficulties in keeping traditional brick-and-mortar retailers competitive. According to research from data provider PitchBook, private-equity investments in retail companies have declined in 2017 as compared with previous years. As of August 4, the data firm recorded 75 private-equity investments in the industry, compared with 185 in 2016 and 183 in 2015.

This is happening as as private-equity firms have more dry powder to put to work in investments than ever, and more broadly, as the stock market has had a banner year.

但是如果私人股本公司在retaile冷却rs, the feeling seems to be mutual — especially for family-owned companies that don’t want to hand over the keys of their business to financiers.

“一些关心他们公司遗产的业主看着私募股权，”科斯曼说。