Greg Minton (Archer Capital), Robin Bishop (Macquarie Capital) and Greg Clark (Westpac) discuss secondary buyouts in The Australian:
MINTON: The other factor is management. They’re a stakeholder, a shareholder. They are trading off going through the grief of being publicly listed with going again with a different private equity investor. Many are asking if they can go and find another private equity buyer that might back my team for the next five years. So the secondary market is also being driven by many management teams saying they enjoy this environment. It seems much more user-friendly than the public market.
BISHOP: I think the issue of one private equity firm selling to another private equity firm says more about the issues associated with the listed market than it does about the private equity market. The listed market will be thinking of how it can ensure it gets quality businesses on our exchange. Listed companies come under tremendous public scrutiny, personalisation of management, media reviewing every step they take. Whereas if you’re a manager working for a business owned by private equity, the focus can be on the business to a greater extent. How much time would a CEO of a listed company spend talking to investors, dealing with media, etc? It’s enormous.
CLARK: As a lender we like the secondary buyout story because it’s a company that’s lived with a leveraged finance debt structure and the focus on cash flow that this requires. Management is used to the demands.