Burger King’s return to private equity ownership in the hands of the Brazilian-backed 3G Capital is not a good reflection on the buyout industry’s claim to make its money by fixing companies rather than through financial engineering.
The TPG-led private equity consortium that formerly owned Burger King and then floated it in 2006 has not achieved what the industry often claims – to re-engineer a company privately in a way that gives it a long-term future in public hands.
The consortium did, however, make a lot of money on the deal.
Instead, Burger King seems to be about to go through the same cycle of being leveraged up with debt and then deleveraged with its cashflows for the benefit of private equity owners.
Surely, if Burger King really had been transformed as a business by its former owners, there would be no need for this deal? Instead, public investors seem to be losing out to private ones.
