How vulture capitalists ate Toys 'R' Us
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How vulture capitalists ate Toys 'R' Us
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Re: How vulture capitalists ate Toys 'R' Us
#2> 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 short.
Re: How vulture capitalists ate Toys 'R' Us
#3>In other words, if Bain, KKR, and Vornado had never come along, Toys 'R' Us wouldn't be doing stellar, but it probably could've muddled through.
Maybe. It was already on a downward spiral. There's pretty much zero evidence that, left as a public company, they'd have figured out a way to reboot. It's not like there aren't plenty of other retail chains in dire straits.
Re: How vulture capitalists ate Toys 'R' Us
#4> 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…
Such as Sears, although their story is a bit complicated too by Eddie’s investments. But they have hung on for a bit too long, regardless, by not addressing internet retail.
Re: How vulture capitalists ate Toys 'R' Us
#5so then, why did the board of directors decide to put it up for sale?
Whenever these stories about buyouts occur, it is framed as the buying company being the agent who has decided the future. e.g.
> if Bain, KKR, and Vornado had never come along
Why does no-one ever mention the board of directors who decide to put it up for sale?
Are they not the true agents in this story?
> Toys 'R' Us wouldn't be doing stellar, but it probably could've muddled through.
Re: How vulture capitalists ate Toys 'R' Us
#6> 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…
Who's "everyone" in this case? Private equity? They get almost all of the windfall and limited downsides. Most of the risk is borne on the company itself, creditors, and especially workers.
These hail Mary's may have a little more use if the moral hazard weren't so blatant, and the rewards and risks more appropriately distributed.
Re: How vulture capitalists ate Toys 'R' Us
#7> 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.
Re: How vulture capitalists ate Toys 'R' Us
#8Contrary to what the author says the story about the leveraged buyout wasn't a footnote or somehow buried. In fact most of the storied I read on the topic mentioned the debt situation as a major factor in the bankruptcy. It's trivial to find dozens and dozens of stories on the topic:
https://www.google.com/search?q=%22toys+r+us%22+%22leveraged...
Re: How vulture capitalists ate Toys 'R' Us
#9Competing 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.
Re: How vulture capitalists ate Toys 'R' Us
#10> 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.
That's a really presumptuous position that employment at all cost is a positive for society and essentially is the fallacy of the seen and the unseen.