11/18/2023 0 Comments Books published by simon and schuster![]() KKR simply raises it, against the publisher’s franchise value, to fund the acquisition. Buy the same company using 60 percent debt, and that same profit in absolute terms yields a 12.5 percent return.Ĭrucially, Simon & Schuster, not KKR, is responsible for repaying the debt. Purchase a company for $100 million in cash with no debt, make $5 million in profit annually, and it will deliver a return of 5 percent. KKR agreed to pay $1.62 billion for Simon & Schuster, of which $1 billion will reportedly be borrowed money.įrom the perspective of the private-equity firm, leverage is a feature, not a bug. In a leveraged buyout, the buyer takes over a company with a small amount of its own money, a larger amount of investors’ money, and a whole lot of debt. Private equity is the anodyne label adopted after “leveraged buyouts” got a bad name, in part thanks to KKR’s ravaging of RJR Nabisco after a $25 billion takeover in 1988. On its face, the Simon & Schuster acquisition appears to be a standard private-equity deal, which is precisely the problem. “It may be a stay of execution, but we should all be worried about how things will look at Simon & Schuster in five years,” says Ellen Adler, the publisher at the New Press, a nonprofit focused on public-interest books. But KKR, infamous as Wall Street’s “barbarians at the gate” since the 1980s, may leave Simon & Schuster employees and authors yearning for a third choice beyond a multinational conglomerate or a powerful financial firm. Because the firm doesn’t already own a competing publisher, the deal is unlikely to trigger another antitrust probe. Less than a year later, the private-equity firm Kohlberg Kravis Roberts announced that it would buy Simon & Schuster. The big five publishers-HarperCollins, Penguin Random House, Hachette, Macmillan, and Simon & Schuster-already control about 80 percent of the book market. ![]() Earlier this year, the Department of Justice blocked Penguin Random House, owned by the German media giant Bertelsmann, from acquiring Simon & Schuster.
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