Deals
Private Equity to Get Squeezed Out of Another Stimulus Program
- Fed’s Main Street facility shuns companies with big debt loads
- Many private-equity owned firms might not qualify for loans
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Private equity’s decade-long debt binge is coming back to haunt it when it comes to obtaining the U.S. government’s coronavirus aid.
Already largely shut out of the popular small business rescue loan program, the industry is now realizing that it’s likely to be excluded from the Federal Reserve’s $600 billion lending initiative because it bars companies that have loaded up on borrowed money. The prohibition strikes at the heart of the buyout-shop business model, where firms saddle the companies they purchase with debt in order to mint bigger profits on their investments.