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Their cash balance, debt, or equity raise. Or they go bankrupt. That would be part of the risk of doing something that got your company this punishment. To be
by ericd 6y ago
Their cash balance, debt, or equity raise. Or they go bankrupt. That would be part of the risk of doing something that got your company this punishment.
To be clear, I’m not advocating these shutdowns as a good idea, there are a lot of implications that I haven’t thought through.
- bboylen 6y agoWho is going to invest cash into a business that has to stop operating for N months, while maintaining everyone on payroll?
- gambiting 6y agoWhy would anyone invest anything in this scenario? Most companies in the world operate without any investment whatsoever.
- bboylen 6y agoAs we saw with the covid market crash, a lot of companies (like airlines) don't keep a lot of cash on hand. If they had 0 revenue for several months but still had operating costs, I am assuming they would need a loan
- ericd 6y agoPerhaps one of the many professionals working in distressed debt or special situations? If you're not familiar, there are desks at Goldman, etc called "Special Situations" that focus on relatively niche investment opportunities. Investors just need the price to be right. Would likely be bad for the shareholders, but again, that's part of the punishment.
- bboylen 6y agoThere could be a price that worked but I don't think there are many businesses that can go offline for several months and come back fine. I'm most familiar with the industry I work in, (O&G), where a day not operating is an incredible loss. Is shutting down the oil refineries and petrochemical complexes what is best for the country? I just struggle to see how this wouldn't just punish normal workers and furthermore just make the economy worse off as a whole
- ericd 6y agoThere would be economic damage, no doubt. And maybe to the level where it's politically impossible to enact this kind of thing. And maybe it's a stupid idea :-)