Spring 2018
Akash Pulluru
THE IMPACT OF TAX REFORM ON THE PE INDUSTRY

On December 19th, a Republican-controlled Congress narrowly passed a tax reform bill. This bill represents the most significant tax overhaul since 1986 and has profound implications for the private equity industry. Although this administration is often chastised for being overly friendly to private equity barons, the reality of this bill is far more complicated.

Issue 21

MANUFACTURING: CAN THE U.S. STAY RELEVANT?

There is a lot to be said about the U.S. economy today. Phrases such as “manufacturing is on the decline” and “worker productivity has been slowing down” are all too common now. 

To address the former, the U.S. economy is often described as having three phases. A booming agricultural U.S. economy lasting through the 1800s was followed by a shift to an industrial and manufacturing economy. Recently, as of the late 1900s, the U.S. seems to have lost its edge in manufacturing and turned to services, an industry portrayed as intangible and possessing low barriers to entry. 

However, the story is a bit more nuanced. 

WYNDHAM SELLS ITS GROWING EUROPEAN RENTAL BUSINESS TO PLATINUM EQUITY

Wyndham Worldwide Corporation recently announced an agreement to sell its European vacation rental business to Platinum Equity, LLC for approximately $1.3 billion, or 9.2x EBITDA. Under the deal terms, Platinum Equity will acquire the target through its Platinum Equity Capital Partners IV, L.P. fund in the second quarter of 2018. The deal is subject to approval of the European Commission and includes a $55 million termination fee from Wyndham Worldwide.

BAIN CAPITAL & IHEART MEDIA: THE SLIPPERY SLOPE OF LBOS

An important player in the private equity market, Bain Capital, is increasingly under public scrutiny for its failed LBO deals. Since 2000, there have been 5 key LBO deals that generated poor returns for Bain Capital: Gymboree Corp, Toys ‘R’ Us, Guitar Center, TOMS Shoes, and iHeart Media. The fund nonetheless still has sound finances due to management fees and purchasing senior debt at significant discounts. Thus, close examination of these failed LBO deals, especially iHeart Media, will reveal whether Bain Capital is on the slippery slope of LBOs and the impact of this trend on the private equity industry.