Private equity targets music companies weakened by file sharing and recession
Evidence
As discussed in chapter 2, private equity (PE) firms raise investment funds to purchase companies, using large, leveraged levels of debt, borrowed against the assets of the target company. After the company is acquired, it is restructured and financially engineered, then sold, hopefully at a profit. Private equity often seeks out “distressed assets”—companies that are facing financial or operational difficulty and are thus more susceptible to a leveraged buyout. Due to file sharing, a recession, changing consumer behavior, and other factors, many music companies fell on hard times in the early 2000s and were subsequently targeted by private equity. — Andrew deWaard, Derivative Media, 188
Categorization
Category: Definitional Content
- DEFINE: Concise definition of the leveraged-buyout PE model as applied specifically to distressed music assets.
- XREF: The causal chain the reader needs — financial distress of the early 2000s (‘file sharing, recession’) directly set up the private equity acquisitions that follow in this chapter.
- ADDENDUM: The distressed-asset pattern here parallels the mechanism of my published pieces on how economic conditions make cultural sectors vulnerable to extractive finance.
Related
- File sharing made music companies distressed assets ripe for buyouts (similarity 0.95)
- Private equity, not piracy, caused the music industry’s revenue collapse (similarity 0.82)
- Private equity buyouts destroyed music companies through debt, cuts, and homogenization. (similarity 0.81)
- Private equity is a rebranded leveraged buyout that saddles targets with debt (similarity 0.79)
- Private equity is a rebranded form of the 1980s leveraged buyout (similarity 0.78)