21–30 of 167 posts
Bright, colorful, and passive. https://duckduckgo.com/?q=toys+r+us+shelves&bext=lcl&atb=v11...
Competing against amazon with an animated Giraffe and a 3x markup was never going to work. If anything I'm surprised they made it this long. That is not to say that Bain, TPG, etc aren't objectively evil.
> if Bain, KKR, and Vornado had never come along, Toys 'R' Us wouldn't be doing stellar, but it probably could've muddled through I'm rarely a defender of leveraged buy-outs, but in this case, I think it was a good thing. Private investors took a moribund business and attempted a turnaround. If they succeeded, everybody would have won. If they failed, a long and tortured slide into irrelevance got aborted and cut sho…
Earlier quoted context omitted.
The managers extracted their management fee, but that's basically only salaries. Management fees in this case were $200 million. That's a pretty nice salary!
> Management fees in this case were $200 million "Toys 'R' Us does say in its SEC filings that $47 million in transaction fees that it owed KKR, Bain and Vornado, have been waived. The advisory fees were also voluntarily reduced by the investment firms in recent years" [1]. (Toys 'R' Us did pay the PE consortium "$470 million in fees and interest" [2], but the vast bulk of that goes to the fund, i.e. the people who j…
>Bain, KKR, and Vornado will have to write off their investment, of course. But they did suck around $200 million in fees out of Toys 'R' Us over the course of their ownership.
Earlier quoted context omitted.
limited downsides It's worth noting that the PE firms involved in the deal lost over a billion dollars on their investment in this case.
Rich people losing a fraction of their wealth and who will rebound thanks to business networking effects, and be given a pass because sometimes that’s how it goes Limited downside seems accurate
You have to be careful when you get vindictive at rich people; they're also the employers, and it's hard to build a system where such people aren't "the rich".
(If you hard-core leveled everyone in the world to equal wealth, nobody would be able to employ anybody else in the current sense of the term. People would have to pool their money and give it to somebody or set of somebodies to manage. And lo, watch "the rich" appear again as the people who successfully employ others get a return, and those who fail do not. It's really hard to avoid "the rich" also being "the employers".)
I can pretty much guarantee someone, probably multiple someones, were called on the carpet at these firms, and did not get the "Oh well, just try again good buddy!" treatment.
> if Bain, KKR, and Vornado had never come along, Toys 'R' Us wouldn't be doing stellar, but it probably could've muddled through I'm rarely a defender of leveraged buy-outs, but in this case, I think it was a good thing. Private investors took a moribund business and attempted a turnaround. If they succeeded, everybody would have won. If they failed, a long and tortured slide into irrelevance got aborted and cut sho…
A slowly dying company is still successfully serving some customers and employing people. So, early failure really is worse for both society and the companies workers. Further, leveraged buyouts are funded with loans, those lending money also lose out.
We got 14 years out of full Toys R Us experience out of this, and the writing on the wall should have been clear in 2004; how many failing retail giants had a good long term outcome from this type of buyout?
Those buying it, and those providing the loans to buy it, lost a lot of money on a bet that they could turn it around. They lost the bet, and so be it.
The previous shareholders got paid and were able to move their capital out into something they believed would provide better returns.
Sure, a lot of people lost their jobs. On the other side, a failing business that could likely not afford to pay well went out of business, and someone else will come in, buy the property, and need new employees.
This isn't as bad as the article makes it out to be. If anything, its good that capitalists tried to turn it around, quickly failed, and now everyone can move onto other things.
Slowly fading into oblivion over decades is not a good thing either.
Earlier quoted context omitted.
> Management fees in this case were $200 million "Toys 'R' Us does say in its SEC filings that $47 million in transaction fees that it owed KKR, Bain and Vornado, have been waived. The advisory fees were also voluntarily reduced by the investment firms in recent years" [1]. (Toys 'R' Us did pay the PE consortium "$470 million in fees and interest" [2], but the vast bulk of that goes to the fund, i.e. the people who j…
I'm assuming he was going from the OP article: >Bain, KKR, and Vornado will have to write off their investment, of course. But they did suck around $200 million in fees out of Toys 'R' Us over the course of their ownership.
Earlier quoted context omitted.
> Management fees in this case were $200 million "Toys 'R' Us does say in its SEC filings that $47 million in transaction fees that it owed KKR, Bain and Vornado, have been waived. The advisory fees were also voluntarily reduced by the investment firms in recent years" [1]. (Toys 'R' Us did pay the PE consortium "$470 million in fees and interest" [2], but the vast bulk of that goes to the fund, i.e. the people who j…
I'm assuming he was going from the OP article: >Bain, KKR, and Vornado will have to write off their investment, of course. But they did suck around $200 million in fees out of Toys 'R' Us over the course of their ownership.
TL; DR Nobody on the Toys 'R' Us deal teams at these firms is happy about this, and all will find their lives in the industry a little bit harder going forward.
Earlier quoted context omitted.
I'm assuming he was going from the OP article: >Bain, KKR, and Vornado will have to write off their investment, of course. But they did suck around $200 million in fees out of Toys 'R' Us over the course of their ownership.
Indeed I was going from the article.
