In April, Staples’ private equity owner, Sycamore Partners, paid itself a $1 billion dividend ahead of a possible IPO for the office supplies giant. It was paid for through a loan that will, as these things go, stay with Staples and add $130 million in annual interest costs. Bloomberg noted the size of the debt-financed dividend to Sycamore “left even seasoned leveraged-buyout experts agog.”
The eye-popping figure grabbed headlines, but it is a relative footnote in the history of private equity’s checkered relationship with the retail industry. Wall Street financial firms have poured tens of billions of dollars into the industry over the past decade and a half to acquire more than 120 retailers. Those deals were often made through debt-fueled buyouts that left retailers vulnerable to changes in the market. And there have been some serious changes in the retail market of late.
