Precious Roy wrote:
Setting aside all the stuff about supporting elite racing, there is a natural life cycle to what investment capital can do with a business after the surge in demand that follows the investment. CGI pumped up a bunch of small to mid size marathons with more money, advertising, etc. and got their hands into mud runs, crossfit and glossy fitness magazines. Initially, they got a great return as races like San Antonio went from 3-4,000 participants to 25,000 and warrior/mud runs sprouted up everywhere. But recently, it has jumped the shark. The marathons are not growing anymore and some are losing numbers due to RnR's lousy race management. The market for mud runs is limited. You are not going to get the same kind of numbers as marathons. So, CGI's principals have to go back to their investors and face the fact that growth has stunted and there is no easy fixes to be made. Absent a major development in their "product" line, I do not see CGI lasting more than another 5 years. Investors will pull the plug and cut their exposure to losses. It will either be chopped up and sold off or scrapped in bankruptcy.
well, not always. private equity can be interested in cash cow businesses. Meaning businesses that aren't growing a huge amount, but generate regular cash flows with little risk or capital demands.
The benefit of a cash flow business is that those cash flows can be put to work elsewhere, in faster growing businesses.
I'm not saying you are wrong, but there are more factors than growth.