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America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

nytimes.com

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Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#21

Post by Spooky23 »

bluejekyll wrote: post #20
sparrish wrote: post #14

Earlier quoted context omitted.

Agreed. This isn't a unique tale for a firearms manufacturer. This is a common tale for nearly any type of manufacturer that is bought out by private equity firms. They reduce costs and quality, load it with debt, suck it dry, and then dump it on their creditors.

I’ve read about this scenario many times, but I’m curious about why any creditor would lend money to a company that’s poised to do this. Wouldn’t these private equity firms lose the ability to borrow money based on past practices like this?

Read the toys r us threads here on Hacker News from a year ago to understand.

The cult of modern business thinking blinds folks in business from the obvious stupidity of the private equity business model. Self dealing almost never ends well.

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#22

Post by ergothus »

Simulacra wrote: post #3
vorpalhex wrote: post #2

This is not an uncommon story for firearm manufacturers unfortunately. Tooling costs are high, sales hard to predict, and designs can fail easily. Ian McCollum of Forgotten Weapons has done a lot of videos on this topic.

There's also the issue - perhaps - of market saturation. How many guns does one need? My pro-gun friends typically seem to have 2-3 but shy away from any more than that.

Compare to social media games like Farmville - most people might spend money they personally consider excessive, but that balances out with some other forms of entertainment. Meanwhile I've heard they had people spending upwards of $10k PER MONTH. Enough so that it wasn't "that one weirdo".

So while the "average" owner might have 1-3 guns (in this case), and the average "fanatic" might have 5-10, you have enough obsessives to throw things off.

(Carefully does not look at bookshelf with literal hundreds of RPGs)

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#23

Post by mobilio »

kevin_b_er wrote: post #16

Not a mystery: Private equity firm bought them out with borrowed money, raided their resources to enrich themselves, then left Remington to rot. It is a common story now. The private equity firm makes a bunch of money and people are jobless.

Who said greed good?

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#24

Post by blotter_paper »

throwayEngineer wrote: post #12
vorpalhex wrote: post #2

This is not an uncommon story for firearm manufacturers unfortunately. Tooling costs are high, sales hard to predict, and designs can fail easily. Ian McCollum of Forgotten Weapons has done a lot of videos on this topic.

Not uncommon for most businesses. >You build something, people want it, pay money. >Competition happens and you need to change or die Don't change quick enough, you are dead. Big companies can't change quickly, but they can throw money at problems. Death of a company is inevitable.

I mean, yes, but that's true of any system with competition. At 1441 years old, Kongō Gumi has outlasted a great many things. They will eventually die, though.

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#25

Post by brightball »

jcranmer wrote: post #17
Simulacra wrote: post #3

Earlier quoted context omitted.

There's also the issue - perhaps - of market saturation. How many guns does one need? My pro-gun friends typically seem to have 2-3 but shy away from any more than that.

There is an intriguing trend in the United States where, for the past several decades, the number of gun owners has gone down but the number of guns has gone up.

Do you mean the percentage of owners?

I can count on one hand the number of people I know who own a home but don't own a firearm.

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#26

Post by refurb »

bluejekyll wrote: post #20
sparrish wrote: post #14

Earlier quoted context omitted.

Agreed. This isn't a unique tale for a firearms manufacturer. This is a common tale for nearly any type of manufacturer that is bought out by private equity firms. They reduce costs and quality, load it with debt, suck it dry, and then dump it on their creditors.

I’ve read about this scenario many times, but I’m curious about why any creditor would lend money to a company that’s poised to do this. Wouldn’t these private equity firms lose the ability to borrow money based on past practices like this?

Lenders lend money because it's not always a failure. Lenovo is a great example of a successful PE strategy.

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#27

Post by mkeeter »

kevin_b_er wrote: post #16

Not a mystery: Private equity firm bought them out with borrowed money, raided their resources to enrich themselves, then left Remington to rot. It is a common story now. The private equity firm makes a bunch of money and people are jobless.

I like Jason Scott's take on it [1]:

"I wonder how many times we're going to keep seeing news media post these sorts of news stories as a 'woah, a tornado hit this landmark' without including one single line about 'the landmark was put in the care of a tornado factory a few years back and never saw another repair'"

https://twitter.com/textfiles/status/1096630478965260289

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#28

Post by captainredbeard »

dsfyu404ed wrote: post #10
krapp wrote: post #4

Earlier quoted context omitted.

Clearly we need to elect another Democratic president to spur the market on.

But preferably after two particular members of a certain branch of government croak and a republican president gets to replace them. I like my snake unstepped. People who live in certain states that shall not be named deserve their snake unstepped too.

Repealing the NFA & the Hughes amendment to FOPA would be great.

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#29

Post by ptah »

bluejekyll wrote: post #20
sparrish wrote: post #14

Earlier quoted context omitted.

Agreed. This isn't a unique tale for a firearms manufacturer. This is a common tale for nearly any type of manufacturer that is bought out by private equity firms. They reduce costs and quality, load it with debt, suck it dry, and then dump it on their creditors.

I’ve read about this scenario many times, but I’m curious about why any creditor would lend money to a company that’s poised to do this. Wouldn’t these private equity firms lose the ability to borrow money based on past practices like this?

the pe firm never borrows, the company they own does the borrowing to pay the pe firm for "services rendered"

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#30

Post by anon1m0us »

bluejekyll wrote: post #20
sparrish wrote: post #14

Earlier quoted context omitted.

Agreed. This isn't a unique tale for a firearms manufacturer. This is a common tale for nearly any type of manufacturer that is bought out by private equity firms. They reduce costs and quality, load it with debt, suck it dry, and then dump it on their creditors.

I’ve read about this scenario many times, but I’m curious about why any creditor would lend money to a company that’s poised to do this. Wouldn’t these private equity firms lose the ability to borrow money based on past practices like this?

The people who make the deal happen get a commission, so there's a sales person selling the deal to the people selling the money.

Everyone is getting sold, so no one really knows the truth.

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