Elon Musk: Always A Douche

[Sheilbh]

Yeah - the story of Red Lobster comes to mind.  It was played out in the media that it was because Red Lobster had an endless shrimp promotion.  But Red Lobster has done that promotion before.  What happened is the private equity owners saddled RL with a lot of debt, plus forced RL to purchase their shrimp from an overpriced supplier that private equity also controlled.

PE is bad

[HVC]

I don't know how they can do something so obviously against the interest of a company and not face any consequences.

[Admiral Yi]

I don't know how they can do something so obviously against the interest of a company and not face any consequences.

Who from?  They are the company.

[HVC]

I don't know how they can do something so obviously against the interest of a company and not face any consequences.

Who from?  They are the company.

Other vendors at the least, who will lose out on the bankruptcy proceedings. Franchisees losing out in their investments. Employees losing their jobs. Probably more I'm not thinking about.

Don't know if RL has any other shareholders?

[Barrister]

I don't know how they can do something so obviously against the interest of a company and not face any consequences.

Who from?  They are the company.

You can see it a few different times.  You have a company that is not doing well.  The owners (who don't have to be private equity) can either A: invest a bunch of money to innovate and revitalize the company, or B: just try to extract as much profits from the company while they can, thereby ensuring it's eventual demise.

B sounds like a terrible option - but it is also a rational one.


Where PE can at least theoretically be more evil is if they're trying to extract money by making deals with related entities.

[Valmy]

I don't know how they can do something so obviously against the interest of a company and not face any consequences.

Who from?  They are the company.

Are they? They don't seem interested in investing in making cars.

[PJL]

I don't know how they can do something so obviously against the interest of a company and not face any consequences.

Who from?  They are the company.

You can see it a few different times.  You have a company that is not doing well.  The owners (who don't have to be private equity) can either A: invest a bunch of money to innovate and revitalize the company, or B: just try to extract as much profits from the company while they can, thereby ensuring it's eventual demise.

B sounds like a terrible option - but it is also a rational one.


Where PE can at least theoretically be more evil is if they're trying to extract money by making deals with related entities.

Indeed, Phillip Green and BHS comes to mind in the situation described (at least here in the UK, no doubt there are plenty of US examples).

[Admiral Yi]

Other vendors at the least, who will lose out on the bankruptcy proceedings. Franchisees losing out in their investments. Employees losing their jobs. Probably more I'm not thinking about.

Don't know if RL has any other shareholders?

You want consequences in addition to the liquidation of the company?

[HVC]

Other vendors at the least, who will lose out on the bankruptcy proceedings. Franchisees losing out in their investments. Employees losing their jobs. Probably more I'm not thinking about.

Don't know if RL has any other shareholders?

You want consequences in addition to the liquidation of the company?

The liquidation of the company wasn't incidental or a consequence of bad business decisions, it was intended. Or so it appears to me. Not the first company to be sucked dry by PE.   

[Admiral Yi]

The liquidation of the company wasn't incidental or a consequence of bad business decisions, it was intended. Or so it appears to me. Not the first company to be sucked dry by PE.   

How did you come to the conclusion it was intended?

[Admiral Yi]

Hillary mongered. 

[HVC]

Hillary mongered. 

Didn't want to derail on tangent lol

[HVC]

The liquidation of the company wasn't incidental or a consequence of bad business decisions, it was intended. Or so it appears to me. Not the first company to be sucked dry by PE.   

How did you come to the conclusion it was intended?

Using a vendor you own with higher costs, in an industry with then margins to begin with,  doesn't scream fiduciary duty to me . And as RL went further and further into debt cost savings would be a first step. A step not taking in regards to this vendor.

I guess it could, in very trusting terms, be gross negligence; but that doesn't seem like a viable defence in any regard.

[HVC]

They did other "shady" things, I believe. Like selling property and leasing back to the company at inflated costs.

[Sheilbh]

They did other "shady" things, I believe. Like selling property and leasing back to the company at inflated costs.

That's fairly standard in PE - one of the reasons it's bad.