6 ms·

Serious question: Has PE M&A ever led to an improved product? (Maybe that's just a stupid rather than a serious question)

dimitrios1 5y ago
Dell? Silver Lake played a big role in that IIRC.
- pinewurst 5y ago
  Silver Lake was only a source for money, not “management expertise” on that deal.
  - dimitrios1 5y ago
    Having worked for a Silver Lake funded company (I originally called a startup, but that's not fair to say anymore for a private company that now makes billions), I can assure you that they don't take a back seat to how the company is ran (that's not to say they take a direct hands on approach, either).
- skeeter2020 5y ago
  Dell's approach was actually more like the classic "taking a company private again", where you use public equity markets to grow big but keep control, then take it private at terms that don't really reward shareholders for the massive growth. This looks like the modern variety of PE capturing predictable revenues from a large, mature client base that can pay their fund the expected returns for the next 5-7 years. It's boring as hell and never means (a) a better product, or (b) a bigger pay-off for employees.
bombcar 5y ago
You could make an argument that Berkshire Hathaway is the largest M&A firm ever. But it's not really private equity (though it's not really public, either).
markus_zhang 5y ago
Limit that to KKR and you are going to see many "good" examples...
cavejay 5y ago
Dynatrace is a monitoring solution and company that recently went public again after being initially taken private by a PE. I believe their offering significantly improved during period. (I was a Professional Services employee for a few years)
missedthecue 5y ago
Hilton hotels in my opinion got much better after the takeover
sarora27 5y ago
In 2017, I joined a company that had been spun out of Ebay and bought by a PE firm. The firm invested a large amount of "growth capital" in the biz to transform the product from a software license to a cloud-based service. This transition not only increased our revenue exponentially but also gave us the ability to analyze data on how customers were using our product (prior to this, we had zero visibility into how customers used our on-prem product). Using this data, we were able to better serve our customers & partners and improve the overall experience of using the product. A few years later, we sold the company to a large company for a pretty penny (>$1B). This is all definitely anecdata but, IMO, being backed by a PE firm forced us to focus on revenue (really EBITDA) alongside product growth. A mechanism that forced us to focus on the impacts of each product decision we made. I think this ultimately helped us keep a steady pulse on the market w/o chasing every shiny new trend that popped up.

dimitrios1 5y ago

Dell? Silver Lake played a big role in that IIRC.

pinewurst 5y ago
Silver Lake was only a source for money, not “management expertise” on that deal.
- dimitrios1 5y ago
  Having worked for a Silver Lake funded company (I originally called a startup, but that's not fair to say anymore for a private company that now makes billions), I can assure you that they don't take a back seat to how the company is ran (that's not to say they take a direct hands on approach, either).
skeeter2020 5y ago
Dell's approach was actually more like the classic "taking a company private again", where you use public equity markets to grow big but keep control, then take it private at terms that don't really reward shareholders for the massive growth. This looks like the modern variety of PE capturing predictable revenues from a large, mature client base that can pay their fund the expected returns for the next 5-7 years. It's boring as hell and never means (a) a better product, or (b) a bigger pay-off for employees.

bombcar 5y ago

You could make an argument that Berkshire Hathaway is the largest M&A firm ever. But it's not really private equity (though it's not really public, either).

markus_zhang 5y ago

Limit that to KKR and you are going to see many "good" examples...

cavejay 5y ago

Dynatrace is a monitoring solution and company that recently went public again after being initially taken private by a PE. I believe their offering significantly improved during period. (I was a Professional Services employee for a few years)

missedthecue 5y ago

Hilton hotels in my opinion got much better after the takeover

sarora27 5y ago

In 2017, I joined a company that had been spun out of Ebay and bought by a PE firm. The firm invested a large amount of "growth capital" in the biz to transform the product from a software license to a cloud-based service. This transition not only increased our revenue exponentially but also gave us the ability to analyze data on how customers were using our product (prior to this, we had zero visibility into how customers used our on-prem product). Using this data, we were able to better serve our customers & partners and improve the overall experience of using the product. A few years later, we sold the company to a large company for a pretty penny (>$1B). This is all definitely anecdata but, IMO, being backed by a PE firm forced us to focus on revenue (really EBITDA) alongside product growth. A mechanism that forced us to focus on the impacts of each product decision we made. I think this ultimately helped us keep a steady pulse on the market w/o chasing every shiny new trend that popped up.