PC Gamer has updated its feature analyzing private equity acquisition mechanisms, using BioWare's closure and EA's layoffs of approximately 400 employees as a starting point. The article focuses on the debt, fees, and asset disposal pressures that leveraged buyouts can impose on acquired companies, while emphasizing that these risks are not inevitable outcomes of all private equity transactions.
The article argues that BioWare's recent development chaos, sales performance, and EA's previous attempts to pivot the studio toward live-service shooters all contribute to the context of its current struggles. Therefore, it is unfair to place all the blame solely on the new owners. Publicly traded companies may also lay off staff, cancel projects, or make poor decisions in the pursuit of shareholder value.
According to the feature, leveraged buyouts are typically financed through a combination of investor capital and borrowed funds, with loans often secured by the acquired company's assets and repayment obligations falling on that same company. The article notes that the EA deal involves a $20 billion loan provided by JPMorgan Chase.
The article also outlines potential value-extraction strategies employed by private equity firms, including workforce reductions, price hikes, and the sale of real estate, subsidiaries, or intellectual property, as well as sale-leaseback arrangements. In such deals, companies must continue paying rent after selling their properties, while also potentially bearing management, transaction, and oversight fees. However, Blackstone's investment in Hilton and Dell's privatization followed by its return to the public market are often cited as relatively successful transactions.
Regarding projects under EA's portfolio, the article states that Marvel's Iron Man, the next Star Wars Jedi title, and The Sims project codenamed "Project Evergreen" remain in development, while Battlefield 6 and Apex Legends will continue to receive support.