How much debt does KKR have? The total on their balance sheet as of March 2024 is $49.53 Billion and it's growing. One significant risk is the substantial debt used for their acquisition financing. If KKR fails to meet performance expectations, this debt burden can be unsustainable. Moreover, assuming the VMware EUC legacy software technical debt increases their financial challenges in 2024 and beyond.
https://www.roundtable.eu/learn/the-advantages-and-risks-of-leveraged-buyouts
33 replies (most recent on top)
So what’s going on now?
"Private Equity companies are vultures. KKR will feast on the decaying carcass of the EUC BU to take whatever profit they can extract from the installed base and then dump it on some other legacy software vendor."
But who would want the EUC installed base, with zero growth, other than Citrix? Tom Krause, ex-CFO of Broadcom and now the Citrix leader, is the only one that's interested.
understand what comes next, in a post-KKR world.
Minimal employees making the minimum viable product with maximum revenue.
I think Broadcom should sell whole VMware to Intel and build one huge legacy trash together
silly con valley. KKR Silverlake Dell Broadcom all same people. Just different legal entities. take it private so that you don't have report the losses. take it off of the public books on broadcom. the whole vmware acquisition is a mess.
Let's keep sharing what might help us understand what comes next, in a post-KKR world.
Sure, you said it useful stuff, not just hateful, mgmt is useless cr@p. If you hate it so much find something else and move on. Nobody is forcing you to stay back. There are plenty who quit recently.
"KKR are smarter than all the plebs on this thread"
Speak for yourself. I'm not intimidated by this and appreciate the grown-up insight.
Let's keep sharing what might help us understand what comes next, in a post-KKR world.
KKR are smarter than all the plebs on this thread ,let the grown ups do the high finance not plebs from …xxxx…
"KKR must find the expertise, to resolve our BU's many growth-related issues."
I don't believe that KKR acquired EUC (now Omnissa) to fix our leadership problems or help our BU grow again. Broadcom needed to sell the BU to anyone who would take it off their hands ASAP. KKR has a history of collecting 'faded glory' assets, so they low-balled HT with their take-it-or-leave-it offer of $3.8B ( less than a quarter of the Citrix deal's value) and then laughed out loud when Hock agreed. Ominissa will be gutted and sold.
Private Equity companies are vultures. KKR will feast on the decaying carcass of the EUC BU to take whatever profit they can extract from the installed base and then dump it on some other legacy software vendor. Right now, it's difficult for a PE to offload their assets like BMC, but eventually, the market will turn around and there's always a fool waiting to buy the remnants of what was once a viable business. And so that's Omnissa's fate.
yet you think they will sort out VMware EUC?
I think what most people are saying is, they can look after themselves, if that means make everyone bend over. If you worry a about yourself, you should be using the time in hand wisely and prep up for the next log of your own journey.
Are you worrying about kkr? You don’t have to
Which is what I was trying to tell, this guys seems to be confused between his feeling about mgmt, and what KKR would do and How they will.
My Point was, don't worry about KKR, they will be fine. As to your opinion about Mgmt, we I have one too, that's my own. Finally, as to what KKR would do, well if you are worried, use the time in hand productively and up your skill set.
Instead of arguing with random people on Internet and trying to showoff about few financial terms read across various M&A articles.
exactly, are you worrying about kkr? You don’t have to.
This is the same KKR that destroyed Toys R Us. Children's toys confounded them ... yet you think they will sort out VMware EUC?
Are you worrying about kkr? You don’t have to
"You really think they need EUC expertise to buy EUC business??"
KKR must find the expertise, to resolve our BU's many growth-related issues. Why am I concerned this will be challenging? Cost-cutting alone won't solve what ails our EUC BU.
Here's the problem: KKR acquired BMC Software in 2018 for $8.3 billion, including debt. Since then they have tried to find a buyer for this legacy vendor's assets. Zero takers.
KKR didn't know how to fix BMC's issues, so they got outside help from a software industry expert. He couldn't find a path to growth for BMC. It's a huge ongoing problem.
Many private equity companies have to hold on to assets they can't sell, like BMC.
Private equity's exit drought has led to a record number of dividend recaps, which is when PE funds pay themselves to kick the debt grenade down the road and into a storm drain. For example, https://www.axios.com/2024/06/18/private-equity-dividend-recaps
As of May 2024, KKR had approximately 7,700 employees across six continents. This includes KKR's Capstone team, which has around 100 full-time professionals who support the company's investment strategies globally.
If you are talking about KKR offices they are only in 4 continents though.
As of May 2024, KKR had approximately 7,700 employees across six continents. This includes KKR's Capstone team, which has around 100 full-time professionals who support the company's investment strategies globally. None have experience in the EUC marketplace, they specialize in helping their acquired companies cut costs over time.
Funny how narrow minded people are. You really think they need EUC expertise to buy EUC business?? So what if they find out they don’t have right leaders they will replace them wh-t who they want and they can always hire.
Now as to my reference of they have people to , was to analyze financial situation and make sure odds are in their favor, most of us here are tech or sales, with little to no knowledge of all the aspects typical hedge funds and private equity look at. sure there could be some with finance background and actually work in finance, but they would be laughing at comments like.
My point is super simple, they have people better paid than you and I to make sure odds are in their favor, with all ifs and buts considered, no need for a software engineer or a glorified sales guys to judge on omg KKR will flip on their belly weir 4bn debt. It’s peanuts for them.
I'd say it's spot about folks being burnt out coupled with the fact that EUC leadership is both incompetent and not transparent. The one guy at the top, let's call him, Stott, would rather talk about fun things like his favorite past time instead of just addressing the real challenges this year will bring.
I'd love to know what sales folks think the forecast for EUC looks like.
"Either way EUC / Omnissa is doomed, the lack of direction and road map due to incompetent management has made the company as outdated as the technology."
I agree, and KKR also lacks the expertise to fix what is so obviously wrong with our BU. I've been unimpressed by Shankar's role, and the people that surrounded him. They just go through the motions of doing the same thing, over and over. No new ideas.
"Really why is it every wannabe financial analyst is sitting and scrutinizing a plan that a private equity firm has come up with??" - Answer: because we have a vested interest.
As of May 2024, KKR had approximately 7,700 employees across six continents. This includes KKR's Capstone team, which has around 100 full-time professionals who support the company's investment strategies globally. None have experience in the EUC marketplace, they specialize in helping their acquired companies cut costs over time.
It is a leveraged buyout with bank debt. The $19 billion fund referenced is used for growth acquisitions, and Omnissa is not a growth company. Their 'Limited Partners' have no interest in funding legacy software company acquisitions. Do the research.
KKR are paying for legacy cr-p, it will be late when they do realize it.
Really why is it every wannabe financial analyst is sitting and scrutinizing a plan that a private equity firm has come up with?? I mean they are not new and they have hundreds, if not thousands of analysts to do their work and come up with all possible scenarios. Right? And if someone is still wondering, it’s not a leverage buy out for this transaction, it’s fully funded 19bn fund they created few yrs ago for North American companies acquisition.
Hocknissa!!!
News is that EUC will be brought by Citrix within next 3 months and folks from EUC will be fired. Too many legacy vmware folks in EUC boat. Same stinky wine in old bottle.
if the whole world is living in your @$$j0l3
The only good thing about the situation is EUC employees will get to be laid off by a company other than Broadcom. There is no future for KKR EUC - and absolutely not if they raise prices. The software was never that good.
Either way EUC / Omnissa is doomed, the lack of direction and road map due to incompetent management has made the company as outdated as the technology. We have been rebranding and renaming our technology for the past 5 years at least and selling it as a "new and exciting" feature. The team is worn out, most of the real talent is gone, what is left is burnt out and just waiting to get a package so they could move on, there is no motivation anywhere... this is true in my team and every other extended team I am in touch with.
No revenue growth is a manageable problem for KKR. They can easily raise prices for desktop virtualization customers by a factor of 2X to 10X, similar to what Broadcom did to improve server virtualization profit margins to pay down the AVGO debt.
However, if the Fed doesn't lower interest rates enough, then KKR may have to lay off some employees. KKR has acquired obsolete software assets before, and they're skilled at cost-cutting. Our employees shouldn't be concerned. Installed base customer price increases will cover Omnissa's debt.
News is that EUC will be brought by Citrix within next 3 months and folks from EUC will be fired. Too many legacy vmware folks in EUC boat. Same stinky wine in old bottle.
Perhaps this is why KKR brought EUC for 4 Billion ? It is a steal given that EUC revenue is 2 Billion a year.
How can KKR avoid layoffs?
They won’t Einstein
The smart private equity investment strategy in 2024 is focused on emerging technologies (in particular, cybersecurity and AI). It's not on legacy end-user computing software applications. That's why the timing of KKR's gamble is in contrast to the leading trends.
https://www.westmonroe.com/perspectives/report/private-equity-outlook
The EUC software market is a flat "no growth" sector. How can KKR avoid layoffs?