Retailers foreshadow Tech Debt Carnage

U.S. retailers are dropping like flies. And it’s worth wondering whether the retail implosion could be a preview of potential pain for the technology industry. This year has brought a surge of retailers that are closing stores, slashing jobs and filing for bankruptcy protection in record numbers. The boom of online shopping and a glut of stores are common factors for the retail carnage.The tipping point, however, was the private equity buyouts in recent years that left many retailers with debt that they couldn’t repay. Of the 19 companies on a Moody’s list of distressed retailers in February, 15 are owned or part-owned by private equity firms. Private equity didn’t kill these retailers, but they helped make the hangman’s noose.Some of the same ingredients that created the retail carnage are now present in technology, which became a surprise darling of private equity buyouts. Dell, BMC Software, Rackspace, Informatica and Marketo were among the tech companies purchased in recent years with private equity money and debt.

 

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