What would you like to know? I read your comment and I think you pretty much get the gist of it, but if you have q's about how private equity (PE) works in this situation I'm happy to try to answer.

As for this deal. First it was 10+ years so feel free to call bullshit on my memory but it felt like amateur hours as if SL/TPG let their new MBA hires run it or people just screwed up when structuring the deal and unsurprisingly it's been a disaster ever since. Some examples of what I mean:

TL;DR buying a knowingly bad business, buying it at auction for a 28% premium, overloading it with clearly too much debt (even by risk-lovers standards), showing little commitment as owners to planning/doing the hands on operations work needed to fix/change/revive a mature obsolescing tech company, nor put in a management team that seemed serious about it either.

It appears SL/TPG saw the prospects for Avaya were weak and did the deal anyway[1]. In case you don't have access to WSJ, article talks about TPG viewing Avaya as a "buggy-whip business" at risk of being outmoded.

That's not so bad on its own. Obsolescing/dying "buggy-whip businesses" are just a reality of the business world. Such companies can still have value and potential. But what's odd is SL/TPG not only stayed in the deal but they bought in at a premium on auction. Meaning they had to fight against other buyers to win the deal and then they paid a premium of ~28% for it. OK guys...Auctions are a joke of a way to buy any business to begin with and such auction deals deserve the little to no respect they get in the PE industry.

(side note: This inevitable obsolescence in a business model is especially true in the tech space lately where the moment you launch a startup or introduce a new product the process of it becoming outdated has already started. All tech companies, big or bedroom, worry about keeping up with the next tech wave and there is no formula to avoid being a one-hit wonder. Of course some companies are able to hang on longer and stay big longer than others (ie "the by luck or by fuck clause" also known as the SV/DC two-step), but anyone who thinks the big FANGs of today will for sure be around in 10 years should read more tech industry history. Every tech business is dying just some faster than others).

As for the Avaya debt. LBO's need debt and debt is not necessarily bad when it comes to buying companies. The analogy for LBO debt is often that it's like buying a house. I guess in the Avaya case it's maybe like a house in Detroit. But if you have a $1MM and want to buy a house it may be better not to use the whole $1Million on the house. Put down $100k and take a $900k mortgage from a bank. Put your other $900k into other investments. At the end of it one should hopefully be better off vs. putting all your eggs in one basket. So while debt to buy companies can be a good idea in theory it doesn't always work out due to just chance and also because the investment industry has a small but news-worthy population of criminals and fucking idiots.

In the case of Avaya it was clear as day they used too much debt. Everyone could see it and there were journalists/articles where the high debt issue was brought up with Avaya management. I don't know if it was negligence or malice or what.

If things don't go well in an LBO and the company has to file for bankruptcy the bondholders lose. But that's not so bad, the bondholders should have known the risks of the investment going in and they were paid for that risk. Don't cry for them.

This reply has gotten long. I will add Kevin Kennedy has not done a good job as CEO...Avaya is spending money on soccer stadium names and has fake filed for IPO how many times then changed its mind? Also what really happened with Louis D'Ambrosio? He leaves suddenly due to medical reasons then went to be CEO of Sears a few years later. SL/TPG put Charles Giancarlo in as a replacement who lasted a year with them?

Lastly, Private Equity and LBOs have the potential to be good for companies and investors and employees. Businesses die and if someone sees a chance to make some money trying to revive it or wants to get paid to dismantle it, that's ok. But this should be done primum non nocere from day 1. This includes accurately telling employees and future investors of the risks of doing the turnaround and it should not be done with outstanding liabilities owned to employee pension plans. Frankly, in my personal opinion Avaya has been run so poorly over the last few years, with risks that did not make sense, that a crime with lapse of fiduciary duty may have occurred.

[1] http://www.wsj.com/articles/avaya-how-an-8-billion-tech-buyo...