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Right now you can buy the whole company for $10bn. Seems cheap. Their building on Madison square Park in NYC is probably worth a $1bn
by anonu 4y ago
Right now you can buy the whole company for $10bn. Seems cheap. Their building on Madison square Park in NYC is probably worth a $1bn
- tgma 4y agoHas assets? Sure. Has liabilities?
- jeron 4y agoCredit Suisse was a real estate play all along. Was Neumann involved?
- hn_throwaway_99 4y agoFolks need to understand the difference between market cap and enterprise value. To buy a company, you don't only have to buy the shares of stock, you also have to assume all their liabilities. True, liabilities should be less than assets. But that's why banks are freaking out in the first place.
- abm53 4y agoCan you explain what you mean by “assume all their liabilities” in practical terms?
- deleted 4y ago[deleted]
- anonu 4y agoPractically: CS may owe money, CS may get sued, CS still needs to pay suppliers and people...
- curiousllama 4y agoThey owe folks money. If you buy them, then you owe those folks that money. So you'll have to pay the purchase price, and then pay the company's debts.
- dndn1 4y agoHow is this the case whenever apparently Credit Suisse investors are not made to pay Credit Suisse debts? E.g. Saudi National Bank, who announced no more cash to CS
- hn_throwaway_99 4y agoThat's the whole point of corporations - that the only thing available for debts is the assets and equity of the company, not the assets of individual shareholders, execs or directors (unless there are some very specific circumstances, which is called "piercing the corporate veil).
- Arrath 4y agoYou want to buy Bob's Delicatessen, a business which makes a tidy profit with their storefront schlepping sandwiches to the local cube farm dwellers. Bob's Deli has a number of on-going costs, like the lease for their storefront, contracts with suppliers to deliver goods, maybe a business loan from a local bank that got them going in the first place. These are all liabilities that you, the new buyer, must take on. You can't just rule from on high and say these business deals were with the old Bob's Deli and go away with the purchase. An example of a purchaser (apparently/allegedly) trying to say that former liabilities no longer apply: Disney buying up Fox, or Lucasfilm, and saying they no longer have to pay royalties out to authors who wrote novelizations of films, or expanded universe properties[1] [1]https://www.theverge.com/2020/11/19/21578621/disney-alan-dean-foster-royalties-copyright-law https://www.theverge.com/2020/11/19/21578621/disney-alan-dea...
- roundandround 4y agoAh, but you don't have to actually assume liabilities, you can only lose as much as the purchase price.. So buying a company with 10 billion in debt and 10 billion in cash for $1 isn't $1 overpriced. It is an opportunity to take a 10 billion bet with "heads I win, tails I walk away chuckling."
- adastra22 4y agoThat’s not how it works. You assume the liabilities too.
- funnymony 4y agoStock owners are not liable. The company is. Right?
- MichaelZuo 4y agoWhen the stock owner is another company that has a majority (or 100%) stake it's usually considered one company for liability purposes, at least in the U.S. Otherwise every company would set up dozens of intermediary shell companies to protect every valuable subsidiary in the hopes of a favorable court ruling if things go belly up.
- kragen 4y agothat kind of is how hollywood and vc firms work
- MichaelZuo 4y agoNo, that's definitely not how VCs work, there's a reason why no singular firm buys up more than half of any company. And probably other folks more knowledgeable on how Hollywood legalities work can confirm a similar taboo exists there.
- 4y ago
- twblalock 4y agoOne of the things that made it harder to convince other banks to buy SVB is the memory of 2008 when banks who bought other banks inherited all their liabilities and lawsuits. > Why isn’t Dimon buying S.V.B.? He has complained about the headaches of buying Bear Stearns and Washington Mutual at the government’s behest in 2008, having spent years fighting litigation and paying fines for those firms’ bad behavior. Bank executives who were around back then remember that. https://marginalrevolution.com/marginalrevolution/2023/03/sentences-to-ponder-123.html https://marginalrevolution.com/marginalrevolution/2023/03/se... It's good to want banks to be punished for causing problems, but if that punishment also applies to people who try to rescue the bank, then nobody is going to try to solve the problems.
- DubiousPusher 4y ago> One of the things that made it harder to convince other banks to buy SVB is the memory of 2008 when banks who bought other banks inherited all their liabilities and lawsuits. Also, no Hank Paulson there with a shotgun to get the job done this time.
- ktta 4y ago*bazooka
- TechBro8615 4y agoIf you purchase all of a company's stock, assuming that confers you 100% of voting rights, then you do "own" the company by most definitions, and certainly by the definitions that creditors would use when they demand their money back from your liabilities. In practice, once you own all those shares, you control the board of directors and can vote on how to handle liabilities, for example by using mechanisms like leveraged buyouts to (legally) shift liabilities to a new entity. The trouble is that to purchase 100% of shares of a company, someone has to sell those shares to you. Just because the stock tanks to $0.01 doesn't mean the board members will sell you all of their shares and voting rights. They don't have to accept your offer.
- tener 4y agoFor the public company: you pretty much can just buy it, barring stuff such as poison pills or regulatory approvals.
- KeplerBoy 4y agoDoesn't seem to be true. Surely the stocks are held by all kinds of people and institutions and only a very small fraction of the shares are up for sale at any given time. Am i missing something? Also the stockprice listed is the price of the cheapest share currently offered, isn't it?
- loeg 4y ago> Surely the stocks are held by all kinds of people and institutions and only a very small fraction of the shares are up for sale at any given time. Am i missing something? Well, when the price goes up from your buying, more of those shares become available. > Also the stockprice listed is the price of the cheapest share currently offered, isn't it? Well, probably last successful transaction, but these are more or less the same number. What you're getting at is that buying the stock piecemeal will drive up the price, which is true. Usually when you want to buy the entire company, you don't buy it piecemeal on the open market. You offer a premium to the market price to the board and the board decides whether or not to propose the deal to shareholders for approval (tender offer). Or you could do a hostile bid which is where you go directly to shareholders.
- triceratops 4y agoBuy it sell the building immediately, transfer the money to one of your other companies, then file for bankruptcy. /s in case anyone was wondering.
- plaguuuuuu 4y agobuy company pilfer physical assets by selling them to companies you control wait for company to go bankrupt anyway
- popcalc 4y agoYou might make a great Hungarian politician...
- vishnugupta 4y agoYeah but then you immediately own all their debt and liabilities. Which is why SVB UK was sold to HSBC for 1 pound because they were willing to take on all its debt.
- petercooper 4y agoI don't know about the rest of the world, but this "sold the business for £1" isn't uncommon in the UK: https://www.bbc.co.uk/news/business-44250900 https://www.bbc.co.uk/news/business-44250900
- drexlspivey 4y agoThat must be the steal of the century. Just sell all the chairs in their office and you 1000x your money
- petercooper 4y agoIt's all fun and games till all the staff demand their wages, suppliers demand their money, banks call in the loans, etc. That's the real reason such owners want to flee.
- opportune 4y agoWish I could have bought SVB for $10, their building in Palo Alto has to be worth at least half as much!