This review examines the growing presence of U.S.-originated private equity funds in Japan through the book and various case studies. It presents acquisitions including Toys "R" Us and HCR ManorCare, illustrating the reality of debt-dependent practices and their social impact.
The book examines Brendan Ballou's <i>Private Equity: Capitalism Eats the World</i> and explains the rise and methods of private equity funds in Japan. It describes how U.S.-originated private equity funds are increasing in scale in the Japanese market, while practices that prioritize private interests over the public interest are becoming a social issue.
As a specific example, Toys "R" Us was acquired for more than $6 billion, with most of the financing provided through the company's own debt. Approximately $464 million was extracted after the acquisition, ultimately leading to the company's bankruptcy in 2017.
At HCR ManorCare, which was acquired by Carlyle, approximately $4.8 billion of the $6.1 billion purchase price was financed through debt. Approximately $88 million was collected in fees, and the company ultimately filed for bankruptcy in 2018.
The book examines acquisitions involving other retail chains, rental housing and healthcare businesses, and points out that private equity funds often use LBOs to finance acquisitions, placing the entire debt burden on the acquired companies. It explains that LBOs are also used in Japan, although borrowing ratios are kept lower.
Overall, the book concludes that private equity acquisitions often weaken companies' financial condition, while only the funds benefit. With regard to Japan, it offers a cautionary perspective and promotes a better understanding of the issue.