Very broad statements you are making. You are correct in that some PEG’s purchase business and go through a process where they trim the fat, but not all PEG’s engage in these processes. Some are very growth-oriented, and others (depending on the company they purchase) engage in a mixed approach.
At the end of the day, a traditional buyout fund has to exit the companies they purchase in a 5-10 year timeline and retain a profit. If the company they purchase fails, limited partners/family offices will not commit to their future funds, and lenders will not provide the debt-equity needed to buy other companies. From the opinion of someone who works in the private capital markets here in NYC (i.e., me…Raleigh native), I do think there is some regulation needed in regards to the lending practices of PEGs (private debt funds), specifically those that lend to consumers, and the debt liability companies concur when a sponsor purchases them. That being said, some would argue that the debt associated with LBOs are priced at a higher premium, and lenders acknowledge the risk they are taking when providing leveraged debt.
In regards to McClatchy, per the New York Times in August, they are being acquired by Chatham Asset Management…a hedge fund. Not sure if the acquisition has been completed yet. The article also states that “Chatham’s bid would allow it to retain most of its employees and honor its collective bargaining agreements.” I love the N&O and have been a loyal customer for many, many years. I personally think there is a place in our society/market, especially in a mid-sized city like Raleigh, for a regional newspaper. What I do predict is that smaller newspapers in places like Wilson, Boone, and Burlington will continue to struggle. I suspect there will be a push for the merger or formation of regional newspapers/media publications rather than those that represent a single town or city. For example, the Triad currently has two newspapers.
In life, I would suggest avoiding painting things with such a broad brush. Our economy is complex, every fund has a different strategy, and each economy in our country (city/town/region/state) is unique and diverse in regards to the people and the businesses that call it home.