It doesn't always turn out that well, but when strategy and circumstances collide, private equity firms can make quite a tidy profit on retail buyouts. The Wall Street Journal has published an analysis of Catterton Partners' and Tower Three Partners' purchase of upscale home furnishings chain Restoration Hardware in the dark days of 2008 and found that the two firms have gotten back about eight times their initial .
Catterton and Tower Three paid approximately $177 million for Restoration Hardware when it seemed on the brink of bankruptcy. Last year, they orchestrated an IPO and today, Restoration Hardware has a stock market value of about $2.7 billion.
According to the WSJ:
"Of 375 buyouts of U.S. companies that took place between 2007 and 2009 and that were fully exited by the end of March, 13, or 3%, netted a return greater than five times costs, according to Cambridge Associates LLC Private Investments Database.made in those years, during the height of the buyout boom, have ended in losses at 10 times that rate, according to the Cambridge data."