Unfortunately certain kinds of vulnerable people can become the targets of a sickening type of capitalism which we see all too often in the U.K. The care home industry is one of the most affected by misguided investment which is having a parasitical affect on these businesses. The basic problems are simple. There are simply too many investment and finance type people on the 'payrolls' of these businesses. Many of them can not be trusted to have any involvement in a business, yet they find themselves conveniently out side the jurisdiction of the police.These people can achieve a healthy return on investment money whilst the debt being loaded onto the businesses increases almost uncontrollably.
Around 430,000 elderly and disabled people live in long term residential care in the UK, but only one in ten are now in council or NHS run institutions.
Voluntary and for-profit companies account for 57% of the independent sector compared with only 5% in 1989.
Southern Cross was the largest care home business until it collapsed. Many smaller care home businesses collapsed before Southern Cross.
If you want to see how Private Equity Firms, Buyouts and Privatisation all with help from banks, combine to create problems with various types of services, then you won't find a much better example than what has happened to Southern Cross Health care. I think it is a good example why our financial businesses need to be policed. At the moment, certain of types people who may call them selves business people can manipulate money from a business whilst slowly destroying that business .............and there is no one to stop them.
The problem is, these so called business people provide so much 'business' for our finance industry, that they get left alone by most politicians...................These politicians have various ways of profiting from allowing this destructive manipulation of these businesses and so often have a vested interest, thus it becomes even more difficult for those who want to outlaw this business...............
..................Here is what really happened to Southern Cross Health care............
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
August 2002
The management backed by West Private Equity and Healthcare Investments Ltd, acquired Southern Cross through an £80 million management buyout..........................................
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The definition of a Management Buyout (MBO) in general terms is a buyout which involves the management buying the company from the current owners or parent company.
..........But, in reality, a management buyout could be the management buying the company from the current owners ,.....who could be the same people.
So why would the management of a company want to go through the procedure of effectively buying the company from themselves?
The reasons are likely to be a combination of the following:-
1....... The owner of the company would like to sell the company, but doesn't want to lose control of it.
2........The company currently has minimal or no debts.
3........The owners want to benefit from the value of their company by way of debt borrowed against the company's value. (But have this benefit without selling the company).
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
September 2004
A secondary buyout of the business by the management together with Blackstone Capital Partners followed for£162 Million.
Blackstone then acquired care home owner NHP (Nursing Home Properties) for £564 Million, which saw a competition investigation by the office of fair trading.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
As you can see with this second management buyout, the same management who bought the company from themselves the first time have now bought it for a second time. This time with a new mortgage and much more money. Along with the help of one of Britain's biggest private equity companies, Blackstone.
Its easy to forget that whilst this financial madness is going on, there are employees of the business trying their damnedest to provide comfort to vulnerable old and disabled people. Few, if any would have any idea of what was going on , on the finance side of the business.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
November 2005
Ashborne Group Care Homes, comprising 10,000 beds in 193 homes was acquired for £85 Million.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Okay, you will have noticed that Blackstone were subject to a competition investigation by the office office of fair trading. Its really good to know that their are business regulators in the U.K. who you can depend on !
After the acquisition of Ashborne, Blackstone re-organised the company.............. They called their new strategy a,"Sale and lease-back strategy." ?
It basically involved all the property owned by Southern Cross Health care being sold off.
NHP bought up the properties and rented them back to Southern Cross Health care. NHP became a property only business.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
NHP Sold to 'Investors'
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
At the point that the original properties of Southern Cross Health Care were sold by Blackstone to 'investors' (Don't know at the moment who these investors were), Southern Cross lost control of it's future costs.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
July 2006 Southern Cross Health Care floated on London Stock Exchange.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Southern Cross collapsed as a result of the rent it was having to pay on the properties it used to own !!!!!!!!!!!
As in many other cases, the collapse of many businesses which seem to be happening on a weekly basis, many are avoidable.
Note on Management Buyouts (MBOs) & Private Equity Companies.
A lot of the information here is obviously second hand. X-Economics is having to use information made available by the business executives of the 'victim companies' and also the finance businesses including banks and private equity companies. In many occasions, where a news paper passes on information on a management buyout to the public, the businesses involved may not have told the whole truth. The term 'Management Buyout' is one that could be used to put investor's minds at ease. The term implies that the people who may have been running the business are now 'putting their money where their mouth is'. The willingness of the management to put their own money in creates an illusion that they have no doubts in their own confidence in running this business. Hence encouraging investment and building potential value should the company be floated on the stock market..............Of course, this could be all an illusion. The management are simply co-operating with a private equity company who want to buy the company. But want to give the deal some synthetic stability, due to a minority of people who have detected problems that they believe have been caused by private equity companies. The illusion is to make investors believe that the management is making the big decisions. In this particular example, there is no doubt that the short term gains and asset stripping, notorious in the private equity business destroyed Southern Cross and there will be many more similar cases in the near future.
to be continued............
Around 430,000 elderly and disabled people live in long term residential care in the UK, but only one in ten are now in council or NHS run institutions.
Voluntary and for-profit companies account for 57% of the independent sector compared with only 5% in 1989.
Southern Cross was the largest care home business until it collapsed. Many smaller care home businesses collapsed before Southern Cross.
If you want to see how Private Equity Firms, Buyouts and Privatisation all with help from banks, combine to create problems with various types of services, then you won't find a much better example than what has happened to Southern Cross Health care. I think it is a good example why our financial businesses need to be policed. At the moment, certain of types people who may call them selves business people can manipulate money from a business whilst slowly destroying that business .............and there is no one to stop them.
The problem is, these so called business people provide so much 'business' for our finance industry, that they get left alone by most politicians...................These politicians have various ways of profiting from allowing this destructive manipulation of these businesses and so often have a vested interest, thus it becomes even more difficult for those who want to outlaw this business...............
..................Here is what really happened to Southern Cross Health care............
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
August 2002
The management backed by West Private Equity and Healthcare Investments Ltd, acquired Southern Cross through an £80 million management buyout..........................................
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The definition of a Management Buyout (MBO) in general terms is a buyout which involves the management buying the company from the current owners or parent company.
..........But, in reality, a management buyout could be the management buying the company from the current owners ,.....who could be the same people.
So why would the management of a company want to go through the procedure of effectively buying the company from themselves?
The reasons are likely to be a combination of the following:-
1....... The owner of the company would like to sell the company, but doesn't want to lose control of it.
2........The company currently has minimal or no debts.
3........The owners want to benefit from the value of their company by way of debt borrowed against the company's value. (But have this benefit without selling the company).
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
September 2004
A secondary buyout of the business by the management together with Blackstone Capital Partners followed for£162 Million.
Blackstone then acquired care home owner NHP (Nursing Home Properties) for £564 Million, which saw a competition investigation by the office of fair trading.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
As you can see with this second management buyout, the same management who bought the company from themselves the first time have now bought it for a second time. This time with a new mortgage and much more money. Along with the help of one of Britain's biggest private equity companies, Blackstone.
Its easy to forget that whilst this financial madness is going on, there are employees of the business trying their damnedest to provide comfort to vulnerable old and disabled people. Few, if any would have any idea of what was going on , on the finance side of the business.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
November 2005
Ashborne Group Care Homes, comprising 10,000 beds in 193 homes was acquired for £85 Million.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Okay, you will have noticed that Blackstone were subject to a competition investigation by the office office of fair trading. Its really good to know that their are business regulators in the U.K. who you can depend on !
After the acquisition of Ashborne, Blackstone re-organised the company.............. They called their new strategy a,"Sale and lease-back strategy." ?
It basically involved all the property owned by Southern Cross Health care being sold off.
NHP bought up the properties and rented them back to Southern Cross Health care. NHP became a property only business.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
NHP Sold to 'Investors'
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
At the point that the original properties of Southern Cross Health Care were sold by Blackstone to 'investors' (Don't know at the moment who these investors were), Southern Cross lost control of it's future costs.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
July 2006 Southern Cross Health Care floated on London Stock Exchange.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Southern Cross collapsed as a result of the rent it was having to pay on the properties it used to own !!!!!!!!!!!
As in many other cases, the collapse of many businesses which seem to be happening on a weekly basis, many are avoidable.
Note on Management Buyouts (MBOs) & Private Equity Companies.
A lot of the information here is obviously second hand. X-Economics is having to use information made available by the business executives of the 'victim companies' and also the finance businesses including banks and private equity companies. In many occasions, where a news paper passes on information on a management buyout to the public, the businesses involved may not have told the whole truth. The term 'Management Buyout' is one that could be used to put investor's minds at ease. The term implies that the people who may have been running the business are now 'putting their money where their mouth is'. The willingness of the management to put their own money in creates an illusion that they have no doubts in their own confidence in running this business. Hence encouraging investment and building potential value should the company be floated on the stock market..............Of course, this could be all an illusion. The management are simply co-operating with a private equity company who want to buy the company. But want to give the deal some synthetic stability, due to a minority of people who have detected problems that they believe have been caused by private equity companies. The illusion is to make investors believe that the management is making the big decisions. In this particular example, there is no doubt that the short term gains and asset stripping, notorious in the private equity business destroyed Southern Cross and there will be many more similar cases in the near future.
to be continued............
