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The money was stolen. This is an utterly textbook private equity play, the kind of thing that has been wrecking American business and jobs. There's nothing su

by CPLX 3y ago

The money was stolen. This is an utterly textbook private equity play, the kind of thing that has been wrecking American business and jobs. There's nothing subtle about this at all, it's looting with a pen. They acquire the business, load it down with massive amounts of debt, do reckless short term things to boost growth (aka "eating the seed corn") and then take the money and keep it leaving someone else holding the bag. It has nothing at all to do with how much people do or don't like cookware. It's a bust out, a racket, just an inch away from organized crime. It happens daily in this country.

coldpie 3y ago
If that's true, I wonder why the article doesn't make this clear. All it says is the company has a half-billion in debt, without any explanation for how that came about. It doesn't even mention that the company is owned by a PE looter. Quotes from the article: > In 2019, his company merged with Illinois-based Corelle Brands, the owner of Pyrex, CorningWare, SnapWare and Corelle. > In 2021, at the height of its popularity, the company borrowed $450 million US worth of bonds, due in 2028, to expand its business. Is Corelle the PE firm? Is "expand its business" the standard figleaf PE firms use when looting a business?
- CPLX 3y ago
  For some unknown reason this all still happens right out in the open without a major media narrative built around it. A few activists and lawmakers have tried but it's still not in the public consciousness. But it's constant and blatant and somehow seems to still be legal. The PE firm here is Cornell Capital.
- anigbrowl 3y ago
  The business press is in on it. I don't mean in the sense that they get financial kickbacks, but business reporting is a cushy job where 90% of the work is rewriting press releases and boilerplate 'analysis' of stock movements.
clairity 3y ago
to be clear, PE isn't always purely extractive, but when it is, it can be highly destructive. sometimes a business is so mismanaged that debt (and the pressure it adds) and new management is all that is needed to right the ship. PE itself is a bloated industry because we have too much money being extracted out of the real economy going into the pockets of the already wealthy who don't know what to do with it, so they hand it to a money manager (i.e., PE) to make more money for them, not knowing what to do with those potential future earnings either. this is the kind of economic inefficiency that concentrations of capital brings, in direct refutation of the common economic argument that the wealthy are better at investing money (i.e., more capital efficient, which in turn supposedly adds more real productivity to the economy). small, local amounts of wealth are more capital efficient, but large, distant amounts are not.
- CPLX 3y ago
  Private equity, as a concept, just means a firm or group of people that owns something. We're posting these comments right now on a website owned by a private equity firm. Technically if I sell my lawn service to some guy with an LLC it's private equity. Private Equity, as a distinct industry, is fully engaged in looting of the type contemplated by the principal-agent problem: https://en.wikipedia.org/wiki/Principal–agent_problem https://en.wikipedia.org/wiki/Principal–agent_problem
  - clairity 3y ago
    not sure what point you're making here, but my point was that there is room for little PE, but not big PE, because little PE can have the effect of making capital more efficient for the overall economy. it's the same with arbitrage--a little arbitrage is good for the economy, but large, systemic arbitrage is extractive for no overall benefit. the principal-agent problem emerges in any business where professional managers are employed (which usually happens when a business gets too big for its britches), so it's not PE-specific.
hungrigekatze 3y ago
A while back I was reading up on private equity as an 'industry' after a prior employer was bought up by PE, carved into bits, with each 'chunk' being sold off to the highest bidder. If you look up the names of some of the PE companies they're quite on the nose: https://macellumcapitalmanagement.com/ https://macellumcapitalmanagement.com/ Macellum literally means "meat market": https://m.dict.cc/latin-english/macellum.html https://m.dict.cc/latin-english/macellum.html 'Take an animal (company); chop it into parts and sell those off' Wikipedia page for Macellum: https://en.wikipedia.org/wiki/Macellum https://en.wikipedia.org/wiki/Macellum
- ambicapter 3y ago
  And they’re proud of it. From their own website: > Macellum’s campaign resulted in the addition of 4 of 13 directors. Also, as a byproduct of the pressure applied during the campaign, the company sold non-core assets equal to approximately 75% of the market capitalization. Macellum’s price objective were met and we exited the position at the beginning of 2021. Subsequently, a fractured board and new CEO were unable to oversee and execute the turnaround plan Macellum outlined during our campaign and results deteriorated.
MandieD 3y ago
A little piece of classical music on this theme: https://www.woodyguthrie.org/Lyrics/Pretty_Boy_Floyd.htm https://www.woodyguthrie.org/Lyrics/Pretty_Boy_Floyd.htm "Yes, as through this world I've wandered I've seen lots of funny men; Some will rob you with a six-gun, And some with a fountain pen. And as through your life you travel, Yes, as through your life you roam, You won't never see an outlaw Drive a family from their home."
NotYourLawyer 3y ago
Stolen from whom? The shareholders got cashed out in the acquisition. The lenders financing the acquisition might or might not lose money, but they’re certainly sophisticated enough that I shed no tears for them.

by CPLX 3y ago

coldpie 3y ago

If that's true, I wonder why the article doesn't make this clear. All it says is the company has a half-billion in debt, without any explanation for how that came about. It doesn't even mention that the company is owned by a PE looter. Quotes from the article: > In 2019, his company merged with Illinois-based Corelle Brands, the owner of Pyrex, CorningWare, SnapWare and Corelle. > In 2021, at the height of its popularity, the company borrowed $450 million US worth of bonds, due in 2028, to expand its business. Is Corelle the PE firm? Is "expand its business" the standard figleaf PE firms use when looting a business?

CPLX 3y ago
For some unknown reason this all still happens right out in the open without a major media narrative built around it. A few activists and lawmakers have tried but it's still not in the public consciousness. But it's constant and blatant and somehow seems to still be legal. The PE firm here is Cornell Capital.
anigbrowl 3y ago
The business press is in on it. I don't mean in the sense that they get financial kickbacks, but business reporting is a cushy job where 90% of the work is rewriting press releases and boilerplate 'analysis' of stock movements.

clairity 3y ago

to be clear, PE isn't always purely extractive, but when it is, it can be highly destructive. sometimes a business is so mismanaged that debt (and the pressure it adds) and new management is all that is needed to right the ship. PE itself is a bloated industry because we have too much money being extracted out of the real economy going into the pockets of the already wealthy who don't know what to do with it, so they hand it to a money manager (i.e., PE) to make more money for them, not knowing what to do with those potential future earnings either. this is the kind of economic inefficiency that concentrations of capital brings, in direct refutation of the common economic argument that the wealthy are better at investing money (i.e., more capital efficient, which in turn supposedly adds more real productivity to the economy). small, local amounts of wealth are more capital efficient, but large, distant amounts are not.

CPLX 3y ago
Private equity, as a concept, just means a firm or group of people that owns something. We're posting these comments right now on a website owned by a private equity firm. Technically if I sell my lawn service to some guy with an LLC it's private equity. Private Equity, as a distinct industry, is fully engaged in looting of the type contemplated by the principal-agent problem: https://en.wikipedia.org/wiki/Principal–agent_problem https://en.wikipedia.org/wiki/Principal–agent_problem
- clairity 3y ago
  not sure what point you're making here, but my point was that there is room for little PE, but not big PE, because little PE can have the effect of making capital more efficient for the overall economy. it's the same with arbitrage--a little arbitrage is good for the economy, but large, systemic arbitrage is extractive for no overall benefit. the principal-agent problem emerges in any business where professional managers are employed (which usually happens when a business gets too big for its britches), so it's not PE-specific.

hungrigekatze 3y ago

A while back I was reading up on private equity as an 'industry' after a prior employer was bought up by PE, carved into bits, with each 'chunk' being sold off to the highest bidder. If you look up the names of some of the PE companies they're quite on the nose: https://macellumcapitalmanagement.com/ https://macellumcapitalmanagement.com/ Macellum literally means "meat market": https://m.dict.cc/latin-english/macellum.html https://m.dict.cc/latin-english/macellum.html 'Take an animal (company); chop it into parts and sell those off' Wikipedia page for Macellum: https://en.wikipedia.org/wiki/Macellum https://en.wikipedia.org/wiki/Macellum

ambicapter 3y ago
And they’re proud of it. From their own website: > Macellum’s campaign resulted in the addition of 4 of 13 directors. Also, as a byproduct of the pressure applied during the campaign, the company sold non-core assets equal to approximately 75% of the market capitalization. Macellum’s price objective were met and we exited the position at the beginning of 2021. Subsequently, a fractured board and new CEO were unable to oversee and execute the turnaround plan Macellum outlined during our campaign and results deteriorated.

MandieD 3y ago

A little piece of classical music on this theme: https://www.woodyguthrie.org/Lyrics/Pretty_Boy_Floyd.htm https://www.woodyguthrie.org/Lyrics/Pretty_Boy_Floyd.htm "Yes, as through this world I've wandered I've seen lots of funny men; Some will rob you with a six-gun, And some with a fountain pen. And as through your life you travel, Yes, as through your life you roam, You won't never see an outlaw Drive a family from their home."

NotYourLawyer 3y ago

Stolen from whom? The shareholders got cashed out in the acquisition. The lenders financing the acquisition might or might not lose money, but they’re certainly sophisticated enough that I shed no tears for them.