Schafer: Sun Country furor gives another black eye to private-equity firms
Summary
The term they use is “sponsors,” which seems to better describe a local Dairy Queen franchisee who helped buy youth softball jerseys. Asked if they look for low-hanging fruit in deals like these, an unprofitable product or service line they can quickly jettison or a wasteful practice they could stop right away, the NEP partners had to pause before giving a serious answer. It’s more likely there’s low-hanging fruit on the opportunity side” with a new line of business or customer segment that management wanted to go after but lacked the capital to pursue. In addition to asking managers to stay calm and think long-term, NEP fills them in on what partner Tim Kuehl called its “value creation” approach. The first thing managers have to do is think of ways to make more money, as the yardstick used to establish what a private company is worth is almost always its recent cash earnings, the income before depreciation, interest and taxes.
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