4 ms·

>There's an idea about financialisation, which is just completely wrong: he notes companies are willing to pay $20 billion for a $10 billion company, after sell

by pydry 5y ago

>There's an idea about financialisation, which is just completely wrong: he notes companies are willing to pay $20 billion for a $10 billion company, after selling it off for its pieces, and noting no value has been added. This is just one face of financialization.It's known as asset stripping and it has a long wikipedia page so my sophomoric take is that it's probably real, but I'd be interested to see your rebuttal to it nonetheless. >Typically the reverse happens, companies get merged for economies of scale They typically get merged to bolster market power and they say that it's for economies of scale because it sounds like it's in the consumers interest rather than diametrically opposed to it and that's how to get mergers approved. Anybody who has worked in a large multinational corporation of stitched together mergers could tell you just how kafkaesque the diseconomies of scale can be. >Then there's a whole piece on globalisation... again, not sure where to start Maybe don't.

sdoering 5y ago
I remember when my employer (together with a whole bunch of other agencies) got bought by a global consulting company. Towards us employees as well as to the market the talk was always to generate better opportunities that one agency alone would not be able to target (read win pitches from the big corporations). Shortly thereafter we were the biggest digital agency in ASGR (Austria, Switzerland, Germany & Russia) and every MD was clapping themselves on the shoulder for achieving this. Nobody seemed to mind that the status came because of a big shopping spree by Accenture and not from natural growth. And what does it actually mean to be the biggest? But I have yet to see said opportunities being won after nearly 5 years. Sure there were some big wins. But in the end the existing agency brands won these pitches, not because they were part of Accenture (Interactive) but brought their own DNA and approach to the table. On the contrary - having to price in the Accenture overhead either led to loosing because of being too expensive or the necessity to offshore most work to India (or nearshore towards Eastern Europe).
- pydry 5y ago
  The worst run company I ever worked for was an financial services company that had ballooned as a result of multiple mergers. Each time they rolled out the efficiencies, synergies and economies of scale spiel and each time it got worse as they patched a new IT system onto an old one.
  - sdoering 5y ago
    I don't know what you are talking about. There is nothing bloated about multiple systems necessary to track my time or my expenses while project managers also insist that you use jira to track time because they otherwise have no way of reporting time spent on a per project level to the client or deliver any reporting more frequent than every fortnight (capabilities we had before the merger). Or the necessity to forbid ssh connections in the corporate networks as well as ssh ports being open on cloud instances. If you need a shell use the one the cloud provider provides you in the browser. While also installing software on your work machine that MITMles you opening up ssl connections (just for security reasons) at least in countries that don't have strong employer protection institutions in place (like mine). /s Pardon my sarcasm. I hear you.
- prirun 5y ago
  Accenture has a "rich" history: https://en.wikipedia.org/wiki/Arthur_Andersen https://en.wikipedia.org/wiki/Arthur_Andersen https://en.wikipedia.org/wiki/Accenture#Split_from_Arthur_Andersen https://en.wikipedia.org/wiki/Accenture#Split_from_Arthur_An... Remember Enron? Oh yeah, sure, they were separate divisions and all that...
55555 5y ago
From the Wikipedia page mentioned: > Early innovators of asset stripping were Carl Icahn, Victor Posner, and Nelson Peltz;[4] all of whom were investors in the 1970s and 1980s. Carl Icahn performed one of the most notorious and hostile takeovers when he acquired Trans World Airlines in 1985. Here Icahn stripped TWA of its assets, selling them individually to repay the debt assimilated during the takeover. This particular corporate raid formed the idea of selling a company's assets in order to repay debt, and eventually increase the raider's net worth.
pas 5y ago
Obviously it's real, but it's done because the expected value for the parties that do it is net positive. Again, obviously, it's like a gamble, sometimes it fails, sometimes it works "great". But. The main point is, healthy corporations are not taken over in leveraged buyouts and whatnots. Companies that would be bankrupt soon are the targets. In that sense these raiders for their own gain what the bankruptcy proceedings does anyway. > mergers Yes, mergers lead to hilariously inefficient giants. And if it goes through the consolidation it manages to be more profitable than the "mergees" together. If it fails, well, eventually they'll lose market share and close, or sell of their parts, or one of the aforementioned corporate raiders does this for them, and so on. However, many times the really big mergers are about simple oligopoly. At that point there's just no real competition between these entrenched already-giant entities. The diseconomies are already there.

by pydry 5y ago

sdoering 5y ago

I remember when my employer (together with a whole bunch of other agencies) got bought by a global consulting company. Towards us employees as well as to the market the talk was always to generate better opportunities that one agency alone would not be able to target (read win pitches from the big corporations). Shortly thereafter we were the biggest digital agency in ASGR (Austria, Switzerland, Germany & Russia) and every MD was clapping themselves on the shoulder for achieving this. Nobody seemed to mind that the status came because of a big shopping spree by Accenture and not from natural growth. And what does it actually mean to be the biggest? But I have yet to see said opportunities being won after nearly 5 years. Sure there were some big wins. But in the end the existing agency brands won these pitches, not because they were part of Accenture (Interactive) but brought their own DNA and approach to the table. On the contrary - having to price in the Accenture overhead either led to loosing because of being too expensive or the necessity to offshore most work to India (or nearshore towards Eastern Europe).

pydry 5y ago
The worst run company I ever worked for was an financial services company that had ballooned as a result of multiple mergers. Each time they rolled out the efficiencies, synergies and economies of scale spiel and each time it got worse as they patched a new IT system onto an old one.
- sdoering 5y ago
  I don't know what you are talking about. There is nothing bloated about multiple systems necessary to track my time or my expenses while project managers also insist that you use jira to track time because they otherwise have no way of reporting time spent on a per project level to the client or deliver any reporting more frequent than every fortnight (capabilities we had before the merger). Or the necessity to forbid ssh connections in the corporate networks as well as ssh ports being open on cloud instances. If you need a shell use the one the cloud provider provides you in the browser. While also installing software on your work machine that MITMles you opening up ssl connections (just for security reasons) at least in countries that don't have strong employer protection institutions in place (like mine). /s Pardon my sarcasm. I hear you.
prirun 5y ago
Accenture has a "rich" history: https://en.wikipedia.org/wiki/Arthur_Andersen https://en.wikipedia.org/wiki/Arthur_Andersen https://en.wikipedia.org/wiki/Accenture#Split_from_Arthur_Andersen https://en.wikipedia.org/wiki/Accenture#Split_from_Arthur_An... Remember Enron? Oh yeah, sure, they were separate divisions and all that...

55555 5y ago

From the Wikipedia page mentioned: > Early innovators of asset stripping were Carl Icahn, Victor Posner, and Nelson Peltz;[4] all of whom were investors in the 1970s and 1980s. Carl Icahn performed one of the most notorious and hostile takeovers when he acquired Trans World Airlines in 1985. Here Icahn stripped TWA of its assets, selling them individually to repay the debt assimilated during the takeover. This particular corporate raid formed the idea of selling a company's assets in order to repay debt, and eventually increase the raider's net worth.

pas 5y ago

Obviously it's real, but it's done because the expected value for the parties that do it is net positive. Again, obviously, it's like a gamble, sometimes it fails, sometimes it works "great". But. The main point is, healthy corporations are not taken over in leveraged buyouts and whatnots. Companies that would be bankrupt soon are the targets. In that sense these raiders for their own gain what the bankruptcy proceedings does anyway. > mergers Yes, mergers lead to hilariously inefficient giants. And if it goes through the consolidation it manages to be more profitable than the "mergees" together. If it fails, well, eventually they'll lose market share and close, or sell of their parts, or one of the aforementioned corporate raiders does this for them, and so on. However, many times the really big mergers are about simple oligopoly. At that point there's just no real competition between these entrenched already-giant entities. The diseconomies are already there.