With the stock market tanking, I think it won't be long before private equity come for their $$s. Will not be surprised if certain parts of the business are sold off soon. This is just the feeling in my waters, and not inside intel, however I've seen similar happen before.
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Per Bob Munro:
With Apollo investing around $500M in May 2023, we have four major investors that we refer to as "sponsors" - these are Apollo, Kohlberg Kravis Roberts (KKR), Searchlight and APAX. Together these four investors own around 75% of Cengage, with Apollo owning the largest share whilst not being a majority shareholder. Of the remaining 25%, around 15% is held by two large institutional investors who are long term backers of the company and the remaining shares held mainly by a long tail of smaller institutional investors and then current and ex management. In terms of exit strategies and timelines, the first thing to say is that key determinants of this are (i) performance of the company , and our ability to build on our track record of growth, and (ii) the state of markets. The two real alternatives for a company of our scale are to take the company public, listing shares on a exchange such as NASDAQ, NYSE etc or a private sale of the company , to a strategic buyer or another Private Equity firm - it is normal for these tracks to be run in parallel and I would anticpate this being the situation in our case. Timing is the most difficult part of this equation - PE firms typically invest with a 5 year time horizon, although this can vary widely (APAX, Searchlight and KKR have been invested in Cengage for much longer supporting the business as we have returned to growth) - when Apollo invested a little over a year ago, provisions were built into shareholder governing agreements, which gave them the ability to require the company to take action towards a sale / IPO of the company 4-5 years after their initial investment - if we continue to deliver on our performance expectations and financial markets are supportive , I would expect this timeline to accelerate.
Greetings,
I understand your concerns and want to address some of the misleading information presented in this post.
1—The stock market is strong and remains at an all-time high. Tensions have been heated over the past few months due to an illegal occupation in the Middle East. We are a short time away from the problem being resolved, and I am confident that the market will remain strong and that the illegal occupiers will have no choice but to get on the train.
2- Furniture and computers are leased items, not assets. The removal of these unnecessary expenses is a testament to our organization's dynamic scalability and the strength of the leadership team's long-term strategic plan.
Cengage has always been a beacon of diversity, fostering a free exchange of cultures and ideas. The recent business updates, aimed at scaling our organization to better serve our customers, have had a positive impact. These changes, aligned with our CSG initiative, are improving the quality of life for people across the globe. Stay tuned for more updates on the significant impact these changes are making in India, China, and other developing nations.
3- Cengage Unlimited has been an unmitigated success that disrupted an entire industry. Coupled with Project Horizon, it is poised to succeed beyond our wildest dreams.
Let me be clear: our balance sheet is strong. When the new financial report is released, it will show an increase in cash, a decline in debt, and millions in cost savings - both realized and projected.
Full Stop!
"Last week, we introduced the new Internal Events and Facilities Services team, which consolidates various responsibilities such as on-site meeting support, travel and hotel negotiations, and internal event strategy and logistics. As a result, we have had to make some adjustments to the Facilities organization to align with this new direction. AR, Facilities Manager, will be leaving the organization on August 16."
getting rid of facilities manager. the furniture reduction effort aligns with this i think.
I’ve seen them move out furniture and sell computers, selling tangible stuff, that is why.
I didn't post this, but the swift and aggressive cost cutting moves since Apollo private equity bought into the company indicates that they are setting Cengage up for some kind of end game. After the failed MGH merger, APAX was biding their time, but PE money is impatient. They've cleaned up the balance sheet, but the cuts have set up a house of cards where there is little hope for sustained success. There will likely be some sort of sale/breakup/spin off within the next 12 months so they can maximize their return. It's impossible to know what that looks like, but a merger seems unlikely since the last one was blocked by the DOJ. However, a Trump administration could be much more hands off when it comes to mergers. Who would have thought MH would be voting MAGA?
I am a current employee, please share why you think this. Is there something specific that you have seen?