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It can be. That doesn't mean it is. Going private allows a company to focus less on shareholder value (its legal first obligation as a traded company save for

It can be. That doesn't mean it is. Going private allows a company to focus less on shareholder value (its legal first obligation as a traded company save for a legally defendable company charter that counters this in any way, which is rarer than it should be). That theoretically allows it to focus on growth or market entrenchment before profits, and take risks otherwise you wouldn't be able to take without risks of lawsuits. It allows more freedom in restructuring and financial business decisions. The downside to that is when a vulture capitals like Bain or Ichan comes along, their motives are to extract as much profit from the 'asset' as possible for themselves regardless of the outcome to the business. It stands in start contrast to venture capital firms that actually care about success. its usually obvious which one 'investors' are. If they're willing to put up money and take risks with you at the start, they're venture. If they're coming along after you're successful but struggling with a 'grand plan' to restructure and improve your business if you accept their money (and hand over way more control than you should), they're vulture. All of that is just my observations of course. I'm open to counter arguments.

abricot 9y ago
Thank you for the explanation.
acdha 9y ago
> its legal first obligation as a traded company save for a legally defendable company charter that counters this in any way This is widely claimed but there is no such requirement: https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-value-myth/ https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-v... The reason is obvious: it’s hard to predict over any non-trivial time in the future, so there’s a broad deference to business judgement. In the case of Toys-R-Us, for example, if they’d been a public company at the time that argument could simply be that lower returns to shareholders now was critical to the long-term health of the business. People who disagreed could sell their shares or attempt to find enough like minded shareholders to replace the leadership but nobody could say their view is unambiguously correct and so the law stays out of it.
bko 9y ago
I don’t understand you’re hostility to what you call vulture capitals. If the assets of a company are worth more than the business as a going concern, shouldn’t the assets be liquidated or repurposed for more effective purposes?
- TeMPOraL 9y ago
  Is lining up pockets of third-parties a "more effective purpose"? Also, it seems to me that your computer could be used more effectively if it was a part of my scientific computing platform. Can I take it now?
  - bko 9y ago
    You can buy it from me, which is what venture capitalists do. You can buy it from me and use it as collateral against a loan provided by a bank. I don’t see anything wrong with this.
    - acdha 9y ago
      That’s not a good comparison. What they’re doing is taking out loans against the business’ future value, buying it, stripping all of the assets and charging large mismanagement fees, and then letting it go bankrupt so other people pick up the costs. There’s not really a market where I could take a distributed computing loan against your computer, put the CPU into a different system, and default on the loan.
      - landryraccoon 9y ago
        I honestly don’t see how this works, are you saying the banks are taking a massive loss on this venture? If so, wouldn’t the banks rationally avoid making loans to companies acquired by vultures, since they would always lose money to them? Who are the individuals taking a massive loss? I’m asking basically why anyone would loan money to Toys R Us after it was acquired by corporate raiders.
  - noah6624 9y ago
rupert42353465 9y ago
It's worth noting that Icahn and all the "key people" (according to Wikipedia) at Bain are Jews. But I'm sure that's just a coincidence, like their predominance in every other major pillar of finance and media. Just a coincidence, goy!

abricot 9y ago

Thank you for the explanation.

acdha 9y ago

> its legal first obligation as a traded company save for a legally defendable company charter that counters this in any way This is widely claimed but there is no such requirement: https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-value-myth/ https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-v... The reason is obvious: it’s hard to predict over any non-trivial time in the future, so there’s a broad deference to business judgement. In the case of Toys-R-Us, for example, if they’d been a public company at the time that argument could simply be that lower returns to shareholders now was critical to the long-term health of the business. People who disagreed could sell their shares or attempt to find enough like minded shareholders to replace the leadership but nobody could say their view is unambiguously correct and so the law stays out of it.

bko 9y ago

I don’t understand you’re hostility to what you call vulture capitals. If the assets of a company are worth more than the business as a going concern, shouldn’t the assets be liquidated or repurposed for more effective purposes?

TeMPOraL 9y ago
Is lining up pockets of third-parties a "more effective purpose"? Also, it seems to me that your computer could be used more effectively if it was a part of my scientific computing platform. Can I take it now?
- bko 9y ago
  You can buy it from me, which is what venture capitalists do. You can buy it from me and use it as collateral against a loan provided by a bank. I don’t see anything wrong with this.
  - acdha 9y ago
    That’s not a good comparison. What they’re doing is taking out loans against the business’ future value, buying it, stripping all of the assets and charging large mismanagement fees, and then letting it go bankrupt so other people pick up the costs. There’s not really a market where I could take a distributed computing loan against your computer, put the CPU into a different system, and default on the loan.
    - landryraccoon 9y ago
      I honestly don’t see how this works, are you saying the banks are taking a massive loss on this venture? If so, wouldn’t the banks rationally avoid making loans to companies acquired by vultures, since they would always lose money to them? Who are the individuals taking a massive loss? I’m asking basically why anyone would loan money to Toys R Us after it was acquired by corporate raiders.
- noah6624 9y ago

rupert42353465 9y ago

It's worth noting that Icahn and all the "key people" (according to Wikipedia) at Bain are Jews. But I'm sure that's just a coincidence, like their predominance in every other major pillar of finance and media. Just a coincidence, goy!