51–60 of 167 posts
Purely anecdotally, but I am typing this on a Dell desktop and regularly use a Dell laptop and I am very happy with both, I am particularly happy with their Linux support.
Is there any analysis of leveraged buyouts over the last x years? Rather than selecting the ones that end in disaster. For example the Dell buyout [1] doesn't seem to have caused a catastrophe yet. Purely anecdotally, but I am typing this on a Dell desktop and regularly use a Dell laptop and I am very happy with both, I am particularly happy with their Linux support. [1] https://en.wikipedia.org/wiki/Dell#2013_buyout
TOY shares had fallen from $40 to the low teens by 2004. By announcing a sale of the toy business, the stock rebounded and ultimately the sale to private equity closed at $26.75 per share. That Board knew they had a declining asset on their hands and sold out, at a large premium, rather than watching their equity slowly decline over the next decade. Anyone who despises private equity should be celebrating this story,…
Did Bain use its own money to buy Toys R Us? No, it was a leveraged buyout. They already made a profit on the transaction. The losers were Toys R Us employees and customers and the banks who provided the loans.
TOY shares had fallen from $40 to the low teens by 2004. By announcing a sale of the toy business, the stock rebounded and ultimately the sale to private equity closed at $26.75 per share. That Board knew they had a declining asset on their hands and sold out, at a large premium, rather than watching their equity slowly decline over the next decade. Anyone who despises private equity should be celebrating this story,…
Huh? Did Bain use its own money to buy Toys R Us? No, it was a leveraged buyout. They already made a profit on the transaction. The losers were Toys R Us employees and customers and the banks who provided the loans.
Bain et al lost over a billion dollars. Not only did they invest the equity, they also loaned some of the debt out of their own funds.
Earlier quoted context omitted.
> A slowly dying company is still successfully serving some customers and employing people. An unprofitable company is an overall loss by definition - sure it's providing some value to some people, but it's consuming more value than it produces. Killing the company quickly frees up the things it was consuming to be used for more productive things. Those buildings can be used for better businesses, or replaced with ho…
This particular company was strategic as it served as a competitive counterbalance to discounters and online stores. The impact of the death of ToysRUs will be significant to the toy industry as a whole, as Walmart/Target only devote a couple of hundred linear feet to toys, and Amazon has killed the little shops that powered the long tail.
"The departure of Toys 'R' Us from the retail landscape will give a boost to neighborhood toy shops.
That’s according to the American Specialty Toy Retailing Association, which predicted that 2018 will be the best year yet for neighborhood toy stores nationwide as consumers flock to these stores in the wake of the closure of Toys 'R' Us."
https://www.chainstoreage.com/finance-0/group-predicts-boom-...
TOY shares had fallen from $40 to the low teens by 2004. By announcing a sale of the toy business, the stock rebounded and ultimately the sale to private equity closed at $26.75 per share. That Board knew they had a declining asset on their hands and sold out, at a large premium, rather than watching their equity slowly decline over the next decade. Anyone who despises private equity should be celebrating this story,…
Although I was initially inclined to agree with the tone of the article, just the numbers in the article itself disproved it's main thesis.
Near the end: > "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."
Near the beginning: >"The trio put up $6.6 billion to pay off Toys 'R' Us' shareholders. But it was a leveraged buyout: Only 20 percent came out out of the buyers' pockets."
Net, using these numbers, is that the buyers put in $1320 million and took out $200 million, a net loss of $1.12 billion dollars. This doesn't mention the $5Billion lost by the other investors (minus whatever interim payments were made).
The board and shareholders did well to get out when they did, and I'd hypothesize that the employees, while still losing jobs, had the jobs with the buyout for years longer than they otherwise would have.
Earlier quoted context omitted.
This particular company was strategic as it served as a competitive counterbalance to discounters and online stores. The impact of the death of ToysRUs will be significant to the toy industry as a whole, as Walmart/Target only devote a couple of hundred linear feet to toys, and Amazon has killed the little shops that powered the long tail.
A counterbalancing opinion: "The departure of Toys 'R' Us from the retail landscape will give a boost to neighborhood toy shops. That’s according to the American Specialty Toy Retailing Association, which predicted that 2018 will be the best year yet for neighborhood toy stores nationwide as consumers flock to these stores in the wake of the closure of Toys 'R' Us." https://www.chainstoreage.com/finance-0/group-predi…
Earlier quoted context omitted.
In 2003, in the pit of a recession, Toys 'R' Us was still profitable. It got caught flat-footed by the proliferation of Walmart/Target and online sales at the same time. Bain and KKR's turn-round strategy was largely a joke: They basically floated a bunch of trial balloons to the press, arguing that they weren't going to just be a toy store anymore (basically become a walmart or target) but that was scuttled. After t…
> there was a team inside Toys 'R' Us that was trying to clone Amazon's e-commerce success If we flipped roles, with the team inside Toys 'R' Us trying to control costs before the PE firms came in and tried to make Amazon competitor, it would sound equally damning.