Thursday, June 30, 2016

Epicor back on the block, heavily laden

The WSJ is reporting that Apax Partners has come down with a case of the 5-year-itch, and is going to try again to find a buyer for Epicor.  Longtime Graveyard readers may recall their last attempt resulted in a bout of inspired Poetry from your humble blogger.

It focused on the shocking financial shell games going on in the firm, a theme which returned the following year when their borrowing practices raised eyebrows even at the ratings agencies who saw nothing wrong with the credit default swaps that led to the 2008 meltdown.

Interestingly, the WSJ piece says in 2014, they turned down offers "deemed too low from bidders including CVC Capital Partners ... Some bids were around $3 billion including debt."

Those last two words are pretty darn important.  How much debt would a buyer have to assume, to take this thing off of Apax's troubled-assets sheet?  The Bloomberg story a year ago said they were looking to borrow an additional $2 billion.  What's that money going toward, you might ask.  New product development?  Building out support teams and taking care of their customers?  Err... well, we do know they've paid themselves over $1 billion in dividends since 2012.

They were still losing money when they stopped reporting financials in 2014. Who knows what the income statement looks like today?  But I think we can all be forgiven for expecting a pretty lopsided balance sheet.

So, who wants to buy that?

UPDATE:  Turns out the answer is KKR.  See the comments.