Private Equity Firms are Gobbling Up Data Centers
chromas from IRC writes:
Private equity firms are gobbling up data centers:
Merger and acquisition activity surrounding data-center facilities is starting to resemble the Oklahoma Land Rush, and private-equity firms are taking most of the action.
New research from Synergy Research Group saw more than 100 deals in 2019, a 50% growth over 2018, and private-equity companies accounted for 80% of them.
[...]The question becomes is this necessarily a good thing? Private equity firms have something of a well-earned bad reputation for buying up companies, sucking all the profit out of them and discarding the empty husk.
But John Dinsdale, chief analyst for Synergy, said not to worry, that the private equity firms grabbing data centers are looking to grow them. "This is a heavily infrastructure-oriented business where what you can take out is pretty directly related to what you put in. A lot of these equity investors are looking to build something rather than quickly flipping the assets," he said via e-mail.
He added "In these types of business there isn't that much manpower, HQ or overhead there to be stripped out." Which is true. Data centers are pretty low-staffed. It was a national news item several years ago that Apple's $1 billion data center in rural North Carolina would only create 50 jobs. That's true for most data centers.
So larger data centers are, apparently, good, but how does that affect the competition landscape with fewer players?
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