3 ms·

Maybe you don’t remember the 80s but this is how pretty much every hostile takeover went down. Leveraged buyout > massive layoffs and restructuring > change in

Maybe you don’t remember the 80s but this is how pretty much every hostile takeover went down. Leveraged buyout > massive layoffs and restructuring > change in business model and the next thing we’ll likely see is some form of selling off assets or divisions, not sure what those would be in Twitter’s case but it won’t be a surprise if they come up with something.

Zigurd 4y ago
There were a lot of awful LBOs, but Elon may take the cake. Even the worst LBOs had a business case, even if in terms of asset stripping, outsourcing, channel stuffing, and other aggressive financial engineering. When Elon bought it Twitter had no free cash flow, existing long term debt, no assets to sell, etc. It's an enormous LBO with strange characteristics done by a guy with no LBO experience, advised by Jason Calacanis and David Sacks. This will be a b-school case study classic.
- rchaud 4y ago
  more like a cult classic. professors will not spend much time on it because there isn't much students can get out of it other than a good laugh.
PM_me_your_math 4y ago
Most of the people judging Musk are unaccomplished 20-somethings with massive inferiority complexes, or mercurial line workers who loved Musk until he publicly rejected the nonsense of their precious political cult, I mean party.
- rodgerd 4y ago
  You should probably seek professional help about that projection problem you have.
  - PM_me_your_math 4y ago
    How original a thought...
rodgerd 4y ago
I do, in fact, remember the 80s. And the point of asset stripping in that era was that the targets were generally companies with good fundamentals in parts, which had either merged or grown in ways that resulted in those good components propping up losing components, which was what allowed the asset strippers to make their money via the process described. The successful asset strippers also had generally done a lot of analysis before they made their aquisition. What detailed analysis did Musk do? A bunch of DMs with Jason Calcinis pulling numbers out of his arse? What's the core profitable business that Twitter has that is encumbered by unprofitable components? If I wanted to look at a case for an asset stripping target in social media, I'd probably look at something more like Facebook, where there's a case that unrolling their rats' nest of aquisitions like WhatsApp, Instagram, and Oculus could result in some valuable spin-offs: for example, if WhatsApp went back to a stripped-down standalone company with a small fee it would probably be quite profitable, as it had been before being Facebooked. But Twitter is twitter. That's it. The only thing I see with this is an echo of when this site's owners sacked Musk for fucking up PayPal with deranged, incoherent edicts. The difference is that no-one can sack Musk to save Twitter from him.
- rsj_hn 4y ago
  Yes, a lot of people remember the asset stripping wave in the 1980s, but not the merger wave of the 1960s. At that time, it was fashionable to assume that the core expertise of "management" could be transferred to pretty much any field, and so you had these bizarre conglomerations of businesses. It turned out that "management" wasn't so transferable, resulting in one big company having a few profitable ventures that were subsidizing unprofitable ventures, and the 1980s saw a lot of those conglomerates split apart (and they probably took it too far in the other direction). At some point, we need a history of post-war corporate capitalism, because it sure seems like it is driven by one fad piled atop another fad.

Zigurd 4y ago

There were a lot of awful LBOs, but Elon may take the cake. Even the worst LBOs had a business case, even if in terms of asset stripping, outsourcing, channel stuffing, and other aggressive financial engineering. When Elon bought it Twitter had no free cash flow, existing long term debt, no assets to sell, etc. It's an enormous LBO with strange characteristics done by a guy with no LBO experience, advised by Jason Calacanis and David Sacks. This will be a b-school case study classic.

rchaud 4y ago
more like a cult classic. professors will not spend much time on it because there isn't much students can get out of it other than a good laugh.

PM_me_your_math 4y ago

Most of the people judging Musk are unaccomplished 20-somethings with massive inferiority complexes, or mercurial line workers who loved Musk until he publicly rejected the nonsense of their precious political cult, I mean party.

rodgerd 4y ago
You should probably seek professional help about that projection problem you have.
- PM_me_your_math 4y ago
  How original a thought...

rodgerd 4y ago

I do, in fact, remember the 80s. And the point of asset stripping in that era was that the targets were generally companies with good fundamentals in parts, which had either merged or grown in ways that resulted in those good components propping up losing components, which was what allowed the asset strippers to make their money via the process described. The successful asset strippers also had generally done a lot of analysis before they made their aquisition. What detailed analysis did Musk do? A bunch of DMs with Jason Calcinis pulling numbers out of his arse? What's the core profitable business that Twitter has that is encumbered by unprofitable components? If I wanted to look at a case for an asset stripping target in social media, I'd probably look at something more like Facebook, where there's a case that unrolling their rats' nest of aquisitions like WhatsApp, Instagram, and Oculus could result in some valuable spin-offs: for example, if WhatsApp went back to a stripped-down standalone company with a small fee it would probably be quite profitable, as it had been before being Facebooked. But Twitter is twitter. That's it. The only thing I see with this is an echo of when this site's owners sacked Musk for fucking up PayPal with deranged, incoherent edicts. The difference is that no-one can sack Musk to save Twitter from him.

rsj_hn 4y ago
Yes, a lot of people remember the asset stripping wave in the 1980s, but not the merger wave of the 1960s. At that time, it was fashionable to assume that the core expertise of "management" could be transferred to pretty much any field, and so you had these bizarre conglomerations of businesses. It turned out that "management" wasn't so transferable, resulting in one big company having a few profitable ventures that were subsidizing unprofitable ventures, and the 1980s saw a lot of those conglomerates split apart (and they probably took it too far in the other direction). At some point, we need a history of post-war corporate capitalism, because it sure seems like it is driven by one fad piled atop another fad.