This is an interesting move. Many companies are still operating on-prem, hybrid cloud or they need to have a multicloud strategy (to operate in certain geographies or to avoid vendor lock-in). If Cloudera can get to the point where they have a big data infrastructure that is competitive with the native offerings from GCP, AWS, etc but easily supports on-prem, hybrid-cloud and multi-cloud, I would imagine there would be many ready corporate customers.
Going private could give them the opportunity to make significant RnD investments away from the quarterly demands of a public company. On the other hand, the private equity backers could enact a bunch of cost-cutting, gut the company, cause its top employees to leave and load the company up with debt. It will be interesting to see how this shakes out.
PE usually is about discipline. I.e. cash based discipline.
So PE change the debt/equity ratio from 30/70 to 70/30, thus enforcing the company to be much more cash efficient. I.e. take LESS risks.
I think the problem of PE is 1) They need some quick return, 2) They don't necessarily understand the details of the tech (although they probably have access to some talents who do, or claim to do. So usually they just cut cost and make profit from it.
I hear this argument a lot but with all due respect, simply understanding the tech is what got them into this issue. They didn’t understand the commercial.
PE has some scars, but they don’t typically take over healthy, well run companies. They take over mismanaged companies, and refocus on the pursuit of profit that you seem to take issue with, ultimately saving the company from bankruptcy.
Eh, you had me up until the ‘ultimately saving from bankruptcy’ part. PE cares about investor return, not some high and mighty altruistic end goal no?
There are plenty of PE deals of companies no where near insolvency, where the companies just had some more juice that could be squeezed (short/medium/long term depending, but usually short/medium term). If it’s a problem if THAT ends in bankruptcy or not depends on if they are able to get sufficient positive return/exit before they get hit by any losses - seen that many times.
Because that isn’t the goal and is often not what happens?
It is purchased to make return, not to save them from bankruptcy. If it is a side effect, that’s fine, but that is not why it’s done or what the goal is no?
Going private could give them the opportunity to make significant RnD investments away from the quarterly demands of a public company. On the other hand, the private equity backers could enact a bunch of cost-cutting, gut the company, cause its top employees to leave and load the company up with debt. It will be interesting to see how this shakes out.