Sunfish, going back to your question about Bain’s exit strategy, apart from the obvious medium-term play of knocking the business into shape and floating or selling it, there is a possible shorter term play involving Velocity. Bain would have the option of either selling (part or all) or spinning off and floating Velocity.
A sale would obviously be the more straightforward of the two options. Last year's re-acquisition of 35 percent of Velocity for $700 million notionally valued the business as a whole at $2 billion. Clearly, it is not now nor was it then worth that (which only goes to underscore the questionable nature of that transaction) but to the right buyer it is possibly worth somewhere in the order of $850-ish million give or take 10-15 percent (that's a back-of-the-napkin estimate based on prior EBITDAR, YMMV).
Two of the many, many questions that would need to be considered are:
- What impact has the industry downturn had on Velocity's earnings/value (and how long would any such impact persist)?
- Is Velocity of greater value over the medium term being retained by the business?
Nevertheless, there's a play there and I'd be surprised if Bain haven't already run down the numbers on it.