https://pluralistic.net/2023/06/02/plunderers/
'Fans of the Sopranos will remember the "bust out" as a mob tactic in which a
business is taken over, loaded up with debt, and driven into the ground,
wrecking the lives of the business's workers, customers and suppliers. When the
mafia does this, we call it a bust out; when Wall Street does it, we call it
"private equity."
It used to be that we rarely heard about private equity, but then, as national
chains and iconic companies started to vanish, this mysterious financial
arrangement popped up with increasing frequency. When a finance bro's
presentation on why Olive Garden needed to be re-orged went viral, there was a
lot of snickering about the decline of a tacky business whose value prop was
unlimited carbs. But the bro was working for Starboard Value, a hedge fund that
specialized in buying out and killing off companies, pocketing billions while
destroying profitable businesses.
<
https://www.salon.com/2014/09/17/the_real_olive_garden_scandal_why_greedy_hedge_funders_suddenly_care_so_much_about_breadsticks/>
Starboard Value's game was straightforward: buy a business, load it with debt,
sell off its physical plant – the buildings it did business out of – pay
itself, and then have the business lease back the buildings, bleeding out money
until it collapsed. They pulled it with Red Lobster, and the point of the viral
Olive Garden dis track was to soften up the company for its own bust out.'
Via John Wehrle, Doug Senko and also Diane A.
Cheers,
*** Xanni ***
--
mailto:xanni@xanadu.net Andrew Pam
http://xanadu.com.au/ Chief Scientist, Xanadu
https://glasswings.com.au/ Partner, Glass Wings
https://sericyb.com.au/ Manager, Serious Cybernetics
