Myles...it means that whatever cash flows are being generated by D&M will go first to pay costly interest payments on the debt used to finance the purchase of D&M by Bain back in 2008, any excess cash will go towards debt pay down, and only after that any remaining excess cash will get reinvested in the company as needed. This looks like a stinker deal for Bain. Private equity firms typically have holding periods of 5-7 years on their investments and then they look to flip the investment, arbitraging the EBITDA and the multiple paid at purchase vs. when they sell the company. Typically look for 30% IRR thresholds. My guess is Bain sells this off at a loss or certainly at a price that grossly underachieved the IRR target.
For D&M, it means very little cash/investment dollars available to reinvest in business. Their only possible exit is to sell the company to a strategic buyer, like a Harman International, that can generate significant cost savings/synergies from reducing overlapping overhead, purchasing, manufacturing and distribution costs. If I remember correctly D&M used to own McIntosh before that was sold to Fine Sounds.
