The reason PE is often viewed as terrible is that it seems to be strongly correlated with short-term-optimized business practices which end up being destructive to most stakeholders.
The general playbook: Borrow a bunch of money and use it to buy an existing company, pay yourself a bunch of money, extract a bunch of profit by ripping off customers and not reinvesting in the company, sell or go bankrupt. Everyone loses except for the people who paid themselves handsomely along the way.
As described in this story, Center Parcs doesn't seem to be following this playbook. Charging money for peak demand is not something unique to them, to PE companies, and not even remotely new. However, underinvesting in the company and hiding that behind financials that look good at a superficial glance -- as done in this article -- well let's just say I wouldn't be eager to buy without doing some extreme due diligence.
The issue with private equity (PE) at Center Parcs UK (CPUK) is that the debt that was used to buy CPUK is being serviced by the company itself. The PE used debt they're not paying to pay for them getting to profit off something.
If CPUK was just spun off and IPOed, the money from the sale of shares, and/or loans with shares as collateral, could have been used for the capital investments needed.
Instead, there's a private equity firm providing nothing of note, taking profit and saddling the actually productive enterprise with debt for the privilege. For another popular example from the UK, check Manchester United. That's the other big issue with PE, other than the fatal short-termism.
The general playbook: Borrow a bunch of money and use it to buy an existing company, pay yourself a bunch of money, extract a bunch of profit by ripping off customers and not reinvesting in the company, sell or go bankrupt. Everyone loses except for the people who paid themselves handsomely along the way.
As described in this story, Center Parcs doesn't seem to be following this playbook. Charging money for peak demand is not something unique to them, to PE companies, and not even remotely new. However, underinvesting in the company and hiding that behind financials that look good at a superficial glance -- as done in this article -- well let's just say I wouldn't be eager to buy without doing some extreme due diligence.