Part 5/9:
Now, as Blackstone gears up to steer Jersey Mike's, many are left wondering how this acquisition will play out. The private equity playbook follows a specific pattern:
Leverage: In a leveraged buyout, the majority of the acquisition cost is covered through loans. When Blackstone acquired Jersey Mike's for $8 billion, up to 80% of that sum was likely borrowed, putting the debt burden on the company rather than the equity firm.
Collect Fees: Private equity firms often charge a 2% annual management fee on the total fund, ensuring they profit regardless of company performance. This means from the get-go, Blackstone stands to gain significant sums merely from ownership.