Private Equity Stakeholder Project

The amount of debt in the Walgreens acquisition is concerning, in addition to Sycamore Partners pledging capital that it does not appear to have. Based on the financing commitments Walgreens disclosed in a March 10 filing with the Securities and Exchange Commission, 83.4% of the financing for Sycamore Partners’ proposed buyout of Walgreens is debt. This is more than double the average debt level (41%) used by private equity firms to acquire companies last year. https://lnkd.in/g5Qhtx_N

The industry average for take-privates in Q4 2024 was 53%, according to PitchBook. Experts worry this puts Walgreens/Walgreens Boots Alliance at a high risk of default and bankruptcy. For paid subscribers only. With insights from the Private Equity Stakeholder Project.

A great article by Chris Isidore highlighting the potential downfall of Walgreens, primarily because of who just bought them- Sycamore Partners, which also has a sizeable graveyard of companies. Buyout private equity firms look for asset rich companies they can strip for parts, selling off real estate and more valuable business segments; they are not investors, they are extractors. Loading a company up with debt in servitude to shareholders limits a company’s ability to survive, let alone thrive. The more cash flow given to shareholders means less cash is available for the business to actually use for itself. In the case of Walgreens, it will now have a much smaller budget to dig itself out of a bigger hole, all for the benefit of Walgreens’ new owner, Sycamore Partners #privateequity #buyout #walgreens #extraction #rentseeking Social Capital Partners Canadian Anti-Monopoly Project Private Equity Stakeholder Project

Following a steady, but modest, year of private equity dealmaking in healthcare, 2025 could see higher levels of activity as market conditions shift. Analysts forecast an increase in transactions due to falling interest rates, a more favorable regulatory environment under the Trump administration, and dry powder available to invest, according to a?report?by the Private Equity Stakeholder Project. In the face of high interest rates and ramped-up regulatory scrutiny in 2024, 1,049 unique deals were completed by private equity firms last year, which marked a 7.6% decline from the 1,135 deals tracked in 2023, the study found. Of the deals made in 2024, 166 were buyouts, 262 were growth/expansion investments, and 621 were add-on acquisitions to 383 unique platform companies. The subsectors that experienced the highest activity were dental care with 161 deals, health IT with 140 deals, outpatient care with 139 deals, medtech with 105 deals, pharma services with 80 deals, home health, home care, and hospice with 73 deals, and behavioral health with 65 deals. Private equity dealmaking peaked in 2021 and has since been trending downwards as high interest rates have made debt more expensive and harder to secure, causing firms to be more hesitant with assets, the report highlighted. As interest rates continue to decrease this year, analysts anticipate that private equity firms will get more aggressive with their investments. Meanwhile, regulatory scrutiny picked up during the Biden administration as lawmakers put the spotlight?on potential consequences of private equity ownership, including increased prices and lowered care quality. However, the same level of antitrust enforcement isn't expected to carry over into the Trump administration. Read more: https://lnkd.in/eMDT82d8 HealthLeaders #CEO #privateequity #mergersandacquisitions

Private equity firm Sycamore Partners just announced it will buy Walgreens. The private equity business model could spell trouble for this large pharmacy chain. Many communities rely on Walgreens for access to necessary prescription drugs, and the company employs hundreds of thousands of people. The typical private equity investment playbook may lead to behavior that jeopardizes patient care and increases bankruptcy risk. In fact, we found that private equity firms were behind 7 of the 8 largest healthcare bankruptcies last year. When looking at all sectors, private equity firms played a role in 56% of large U.S. corporate bankruptcies during 2024.

After several months of speculation, Walgreens Boots Alliance confirmed it will take itself private in a sale to New York-based private-equity firm Sycamore Partners for $10 billion. Sycamore, which has traditionally specialized in retail and consumer investments, will acquire Walgreens for $11.45 per share in cash, a premium of 29% to the company's closing share price of $8.85 on Dec. 9, the pharmacy chain said today. The deal, among the largest leveraged buyouts in the past decade, values Walgreens at about $23.7 billion, including debt. Walgreens said the transaction will leave it "better positioned" as a pharmacy, retail and health care company. More in Crain's Chicago Business: https://lnkd.in/gzYmCjxs

Private equity-owned hospital chain ScionHealth announced in February that it is permanently closing three hospitals and laying off hundreds of hospitals workers. The closures come as Scion struggles to shoulder substantial debt and private equity hospital ownership faces increased scrutiny from lawmakers. ScionHealth is owned by private equity firm Apollo Global Management and operates long-term acute care and rehabilitation hospitals under multiple brands, including Kindred Healthcare. Apollo’s hospital ownership has recently come under fire from lawmakers and regulators; earlier this year the US Senate Budget Committee released the results of a bipartisan investigation into private equity ownership of hospitals that focused on Lifepoint.

On April 3, attend The Care Economy's online event "Risky Business: Profitizing Home Care"! Featuring Cynthia Cranford of University of Toronto Department of Sociology, Kenyon Wallace of Toronto Star and Mary Bugbee of Private Equity Stakeholder Project. https://lnkd.in/gWrAaY84