Category Archives: Business Acquisitions

WELL KNOWN PRIVATE EQUITY FIRMS STUCK WITH OVER $668 BILLION IN BAD DEALS, AND 12,000 BUSINESS THEY CAN NOT SELL!!!

Deal Drought Adds To Private-Equity Costs

Private equity’s three-year deal slump has worsened a longstanding problem: billions of dollars of aging, underwater funds that continue to cost investors money.

The slowdown in mergers and acquisitions that began in 2022 has made private equity less profitable and reduced the amount of money firms return to investors. While this year began with hopes of a recovery, the slump has persisted, and shares of the biggest firms— Blackstone, Apollo Global Management  and KKR — are down 10% or more in 2025. Over the same time, the S& P 500 has risen roughly 5%.

Beyond hitting profits, the slump has delayed the timeline for private-equity firms to sell investments, adding to the pile of so-called tail-end funds, those a decade or more old.

Firms had $668 billion of private-equity assets globally stuck in tail-end funds as of the most recent data, from the end of 2023, 19% higher than the previous year, according to a forthcoming report from Treo Asset Management, a special-situations firm.

“Funds are getting older, and the holds are getting longer,” said Finbarr O’Connor, Treo’s chief investment officer and founding partner. While the report is based on data more than a year old due to a lag in when firms issue financial data, O’Connor says the trend continues, and he forecasts tail-end assets to hit $1 trillion in coming years.

Many of these deals are underwater. The Treo report showed more than a third of assets held eight years or more are worth less than the initial capital invested.

These stuck funds can be a double blow for a fund’s backers: Often unsuccessful investments that are hard to sell, they raise investor costs by extending the annual management fee for years past the usual term.

Fund limited partners are likely paying between $3 billion and $13 billion a year in management fees on the $668 billion in tail-end assets, based on the typical fee range of 0.5% to 2% of net asset value, according to Treo’s estimate. Firms often reduce a fund’s management fee from the industry-standard 2% once it enters tail-end territory— but rarely all the way to zero.

The report underscores some of the cascading effects of private equity’s exit drought. In the U.S., firms’ combined exit volume in the nearly 2½ years since the start of 2023 remains below the 2021 sum alone, according to research provider Pitch-Book Data. By 2023, U.S. firms’ median investment hold time had climbed to a record high of seven years, and it remains near the historic peak.

U.S. buyout firms held nearly 12,400 unsold companies as of the first quarter of 2025, a seven- to eight-year backlog at the current pace of sales, PitchBook says.

Private-equity investors have grappled with the problem of old, struggling investments for years.

Selling tail-end stakes on the secondary market is hard, because most buyers want bluechip assets, not old funds full of odds and ends. Continuation funds are a popular way to extend promising assets, but are less viable for those of uncertain or little value.

Removing a fund’s general partner and installing a new one to wind down the assets is something more investors are considering now amid the sales slowdown, O’Connor said. It is considered a drastic step, and happens rarely.

Often, investors have no better option than to be patient and wait for a sale. But that leaves the question of fees, and how to best motivate managers to sell and wind the fund down.

More investors “are scrutinizing the fee model” of these late-stage funds, said Runjhun Kudaisya, a partner in the private- funds group at law firm Goodwin Procter. With average fund life—which used to be 10 to 12 years—now stretching toward 15 years, “there has been a shift in the market” and fund backers increasingly try to negotiate late-stage fees CERTAINLY TIME TO STOP INVESTING WITH THE BIG NAMES. THE ONLY THINGS THEY ARE GOOD AT IS GETTING FEES!

ELON MUSK’S TAKEOVER OF TWITTER WAS BADLY PLANNED

Our takeovers and acquisitions over the last 40 years, have taught us that it is vital and necessary to conduct quiet due diligence on the publicly traded takeover target, to determine how viable it is from a financing standpoint.

Is it really a great price, and at that price is it able to be financed with the highest leverage ( loans to be structured) possible, to make it a viable acquisition, and then after all the loans taken to buy it, is there a profit still left for the new owner?

Elon Musk appears to have made an impulsive move to acquire TWITTER, without doing such simple due diligence and calculation of its financial viability.

However, his name and reputation at that time as the RICHEST person in the world ( using the over-hyped and overpriced Tesla stock as value), gave some impetus for his investment bankers to find a way to structure a really badly overpriced acquisition transaction. After all, they saw stratospheric fees and a $43 billion value.

” Elon Musk offered to buy Twitter for $54.20 a share, or about $43 billion.

“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy,” Musk wrote in a letter sent to Twitter Chairman Bret Taylor.”

Why would any sane (normal) buyer want to buy this business which had an adjusted stockholders’ equity of approximately $6 billion, and a pretax credit loss from operations last year of $411 million and pay $43 billion???!

Some people have more money than brains, as they say.

From a financial standpoint, there was no reason to overpay for such a weak performing business at 7 times its net worth!

There was absolutely no reason to buy it at that price or even at half that price, especially since Mr. Musk suspected that a great deal more than 5% of its accounts were actually computer bots, an not really people who could or would generate a future profit for the company!

Musk should have said to the company that he could consider an acquisition AFTER due diligence FIRST…not after. On top of all his mistakes, he agreed to a $1 billion break p fee that he would pay if he did not conclude the deal!

Are Moe, Larry and Curly his financial advisors?

Twitter alone is really a boring company. It tries to sell advertising worldwide by having readers click on links….great thought but the year before it lost $1.3 BILLION….

Now the lawsuits-he said they said-bad guy, good guy, etc…

Our suggestion, find a REAL business, like maybe one of the legacy auto companies to merge with TESLA, the auto company and have a REAL business!
Tesla could buy Renault which has a market value approximating $7 billion, and also own 44% of NISSAN! WHAT A DEAL!!!!!

Elon, call us we got some ideas for you, that will make financial sense for you, TESLA and your stockholders.

DOUBLE YOUR BUSINESS EVERY YEAR GUARANTEED!

Every business has the challenge of growing its revenues and profits, as a means of survival among its competition. This simple business model applies to every type and size of business, in every industry, in every country in the world.

Management faces the challenge, by formulating business models for the success of the business, through sales and marketing programs that may increase its revenues and profits-IF they are successful.

However, success is never assured no matter how well planned are the forecasts and presentations. Just remember back to the NEW COKE rollout of a new and improved version of the popular soda. IT WAS A TOTAL DISASTER!

Management failures of grand business growth schemes are plenty and will continue, because the best laid plans are only “guesses” and opinions of the people developing them. Nobody can predict the outcome of a marketing plan, and can only wait to see if it works, after it is implemented.

Our firm as consultants and/or principals in business acquisitions, have learned a lot over the last 40 years of how to grow the revenues of a business,country no matter what industry or country.

Our principals have owned businesses of every size with the largest having over 12,500 employees and over 300 locations, to a large NYSE public company with revenues of over $160 million, acquired via tender offer. We have been involved in valuations of businesses, liquidations, proxy contest consulting, strategic planning for acquisitions and every type of related consulting a business may require-large or small.

Our principals proposed an acquisition of a large multi-national publicly traded company with revenues in excess of $100 billion, and structured its financing, but the target instead merged with a competitor instead.