
Vista Equity to Buy Tibco Software for $4.3B - stevewilhelm
http://www.reuters.com/article/2014/09/29/us-tibco-software-m-a-vistaequity-idUSKCN0HO11Y20140929
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newppc
To employees of Tibco - as with any private equity buyout, Vista's goal is to
shed the weight, reduce expenses, and streamline the company and then sell it
for a higher price later. What that means for you is that your company will
most likely be moved to Texas, as is what happened when Vista bought my last
company this year. They will also slowly lay off workers every few months, and
morale will most likely drop. So get out those resumes.

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Nicholas_C
>What that means for you is that your company will most likely be moved to
Texas, as is what happened when Vista bought my last company this year.

I'm guessing you worked for ACTIVE Network or Omnitracs. From a PE standpoint
it's a great move to cut costs. You can pay less in rent and really save money
on salaries through the lower cost of living in Dallas and from many of the
employees that will quit because they don't want to move.

Really unfortunate to work for these companies when they are bought and moved
though, if you're lucky enough to not get laid off in the first place.

~~~
newppc
Yea after experiencing the buyout and watching it unfold over a year it got me
more interested in how these deals work. One major question is - is the cost
savings of hiring a worker in Texas with less experience at a 30% savings
worth it if you're losing a few years of knowledge of internal workings and
products? Very debatable and probably changes position by position, company by
company. Also a buyout has a significant impact on general morale as everyone
is now job hunting and wondering which week the layoff announcement is coming.

~~~
Nicholas_C
>One major question is - is the cost savings of hiring a worker in Texas with
less experience at a 30% savings worth it if you're losing a few years of
knowledge of internal workings and products?

Maybe not. But even though the new employee might not be as productive there
is a very real increase in EBITDA from a decrease in expenses. Greater EBITDA
leads to greater valuation. Then all you have to do is show consistent mid
single digit percentage revenue growth a few years in a row and convince the
public markets/equity analysts the whole thing won't fall apart anytime soon
and you can cash out in an IPO.

For most PE firms it seems that it's really about hacking the financials. If
comparable firms are selling at 15 times EBITDA, and your EBITDA grows from
$200M to $250M over several years due to reorg savings and consistent revenue
growth, you can rationalize that the company is worth $3.75B ($250M*15) now
instead of $3B ($200M x 15).

Very interesting stuff. If anyone reading this works at a PE firm and is
willing to let a finance geek pick their brain please give me a shout at my
e-mail in my profile.

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x0x0
I'm not saying there are no inefficiently run companies in the world, but
these PE buyouts all seem to follow the same plan.

Buy a company, pay yourself a fat fee. Force the company to borrow a ton of
money and pay yourselves back. Start cutting costs. Some is fat, but much of
it (like Mark Hurd slashing R&D at HP) is cutting R&D or sales in ways that
don't hurt for long enough for the PE firm to cash out. It's a hell of a
business model, particularly when it seems like these PE firms often financial
engineer themselves into a position where they succeed financially whether the
acquired company succeeds or fails.

It seems to often work out well for the PE firm, and much less well for the
company, customers, and employees.

~~~
walterbell
[http://www.newyorker.com/magazine/2012/01/30/private-
inequit...](http://www.newyorker.com/magazine/2012/01/30/private-inequity)

 _" Having already piled companies high with debt in order to buy them, many
private-equity funds had their companies borrow even more, and then used that
money to pay themselves huge “special dividends.”

..As if this weren’t galling enough, taxpayers are left on the hook. Interest
payments on all that debt are tax-deductible; when pensions are dumped, a
federal agency called the Pension Benefit Guaranty Corporation picks up the
tab; and the money that the dealmakers earn is taxed at a much lower rate than
normal income would be, thanks to the so-called “carried interest” loophole."_

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jduhamel
Looks like a great deal for Tibco'ers.

