7 ms·

Company A is 6 days away from going out of business. They will shut their doors. All employees will lose their jobs. All customers will lose access to whatever

Company A is 6 days away from going out of business. They will shut their doors. All employees will lose their jobs. All customers will lose access to whatever Company A does that they find helpful. But then Company B agrees to buy them for $1 so that they continue running. Pays the employees, and continues running the service for customers. Ban it?

itsrobforreal 3y ago
Yes, absolutely. Company B would have to compromise the service and change the rules. Company B can instead spin up its own business and ask Company A to advertise for them, but anything else is just selling out users.
hcal 3y ago
I'm not advocating for banning M&As, but I think that could be addressed by only allowing acquisitions under specific bankruptcy conditions. Again, though, I'm not advocating for that position. I'd hate to spend part of my life building a business and not be able to cash out when the time comes for me to retire.
- Curvature5868 3y ago
  Is it possible for private companies to pay dividends? Let's say you retire and you own a portion of a small but thriving company. Could that company potentially provide you with dividends as a form of income?
  - bstpierre 3y ago
    Yes, a private company can pay dividends. Or you could loan it the money to buy out your shares and collect interest as it pays back the loan. Or a mixture of the two, with a thousand little variations on terms. I believe I ran into an employee-owned company once that had gone through some version of the loan scenario.
    - traviscj 3y ago
      Possible, yes, and frequently used I’m sure, but entangles the retirees financial future with the business’s future — the retiree loses if the new owners make bad decisions, overleverage, and end up defaulting / bankrupting themselves. I don’t think it’s reasonable to force all businesspeople to retain this risk after disposing of the business concern.
- ClumsyPilot 3y ago
  > not be able to cash out when the time comes for me to retire You can perfectly cash out by selling your business to private equity, or to anyone really. Ban on M&A just means you cant sell a social network to Facebook, but you could sell it to Microsoft, to Autodesk, to Berkshire capital, etc.
  - abenga 3y ago
    Coul Berkshire Capital buy two social networks and merge them? Could Facebook form a capital holding company and buy a social network anyway?
kortilla 3y ago
They can still go bankrupt and company buys the assets without employees ever losing pay. Many bankruptcies work this way.
- herval 3y ago
  So the rule would be that companies can only get acquired after they go bankrupt? Would anyone ever invest in startups, in that scenario?
  - JohnFen 3y ago
    > Would anyone ever invest in startups, in that scenario? Because they are expecting that the startup will turn into a profitable business, maybe? Being acquired is very far from the only way that an investor can see returns.
  - meepmorp 3y ago
    There's still IPOs, isn't there? Maybe it cuts down some of the stupid money going into tech, too, which wouldn't be the worst thing. And, hey, if the business is successful, you own part of a successful business.
    - floren 3y ago
      A decade+ of acquisition as the default "exit" (and the idea that you have to be driving for an "exit" in the first place) made people straight up forget how companies normally work, apparently.
      - meepmorp 3y ago
        Seriously, why not just do something well and make a living from it? I've seen the word enshittifcation plenty lately, and it strikes me that the focus on exits and payouts is a big part of the problem. I feel old and you goddamn kids better be off my lawn by the time I get back with the shotgun.
lcnPylGDnU4H9OF 3y ago
If a blanket ban runs into this problem, what about a "ban by default"? Basically just flip the script so it doesn't require a denial based on circumstances but instead an approval based on circumstances.
- fsckboy 3y ago
  I like the way you think.
- hakunin 3y ago
  This doesn’t work in practice due to typically severe time constraints. You cannot expect a business that has 6 days of life left to wait for such an approval process. These things never happen fast.
  - turmacar 3y ago
    What M&A are you familiar with that they can typically happen in a 6 day timeframe? I know this is already a stressed straw man in the first place but M&A are aren't a short simple process anyway. Adding some oversight isn't going to change that. Yes there are tradeoffs to more regulation vs total anarchy/free market. That doesn't mean they're not worth it. "Good" is not the enemy of "perfect" and all.
    - akiselev 3y ago
      > What M&A are you familiar with that they can typically happen in a 6 day timeframe? Youtube, for one: https://techcrunch.com/2011/10/30/the-entire-1-65b-acquisition-of-youtube-took-a-week-was-negotiated-at-dennys/ https://techcrunch.com/2011/10/30/the-entire-1-65b-acquisiti... Android as well, if I'm remembering correctly. They don't necessarily need to complete the acquisition in a week, just get the broad details negotiated and agreed to. Given the GP's bankruptcy example, if they thought it was worth the risk the acquirer can extend a bare minimum amount of credit to keep the company alive while they do the rest of due diligence and finish the acquisition, folding it into a breakup fee.
    - 3y ago
fsckboy 3y ago
> Company A is 6 days away from going out of business...But then Company B agrees to buy them for $1...Ban it? versus scenario 2, Company A is profitable. Company B is smaller, but up and coming. An announcement is made that A will buy B and everything will be better. Layoffs ensue, product lines are dropped, employees and customers are very unhappy, but prices and profits are up. Since scenario 2 is quite common today, and scenario 1 is relatively uncommon, yes, ban it, that's a better way to run markets. We're conducting a thought experiment here. So we think through the implications and try to figure out if there is a way to achieve benefits for all, benefits that we know exist. Don't be scared of a single negative scenario, have to look at the big picture, what is better overall. I'm glad billionaires have the freedom to build kooky submarines that other multimillionaires can climb aboard and go on dangerous adventures, sometimes ending in the ultimate sacrifice. Why a whole bunch of other people who were uninvolved engage in weeks of hand-wringing, I can't grok at all.
- kbenson 3y ago
  > that's a better way to run markets. I'm highly skeptical that heavily restricting buying and selling of companies in general will be a better way to run a market when it seems your goal is to prevent monopolies (or put another way, ensure competition). Laser focused policies work for a short periods but tend to be worked around quickly as the thing they regulate falls out of favor in lieu of something functionally the same but different enough it doesn't match. Blanket policies tend to stifle the market in general, causing other problems. Rather than assuming that any specific law actually "solves" the problem, we'd probably be much better off setting criteria we're trying to match and and reassessing regulations regularly to try to meet that criteria. Anything unresponsive will be routed around. The real problem is that we have things that do that (the SEC and FTC) and they're broken. We should fix them, not swap to a sledgehammer as the only tool available.
  - fsckboy 3y ago
    >I'm highly skeptical that heavily restricting buying and selling of companies in general will be a better way to run a market when it seems your goal is to prevent monopolies (or put another way, ensure competition) ah, the markets I am talking about are goods and services markets. Financial markets, they take care of themselves, and at the same time garner no sympathy from the majority who don't participate in them. if monopolies emerge some other way, sure, break 'em up just the same.
wussboy 3y ago
If the market can be relied upon to determine the winners, it must also be relied upon to determine the losers. I support the "no M&A" policy.
TeMPOraL 3y ago
This example sounds nice on paper, but has anything even remotely similar ever happened, within living memory? I have my doubts. So while possible in theory, if it's impossible to happen in practice, it's not a valid counterargument to a practical proposal.
- deleted 3y ago
  [deleted]
- adalacelove 3y ago
  https://www.marketwatch.com/story/santander-buys-struggling-banco-popular-for-1-2017-06-07 https://www.marketwatch.com/story/santander-buys-struggling-...
tremorscript 3y ago
Its capitalism. Companies must die rather than become merged zombies(Soviet Style). Since this is hypothetical. Maybe the employees shall then start their own startup and get success or maybe the company was shitty anyway in the first place.
autoexec 3y ago
> Company A is 6 days away from going out of business. They will shut their doors. All employees will lose their jobs. All customers will lose access to whatever Company A does that they find helpful. If Company A was providing a service that people found helpful, someone else who is more competent at running a business will step in to fill that need. Employees will flock to the new better run business or move to some other better run business. When new companies have to step up to provide popular goods and services that were previously being provided by failing, poorly run companies, it results in innovations and new ways of doing things instead of just letting bloated industry giants continue to be propped up artificially by restricting consumer choice. Having more players in a market also increases resiliency and improves stability. If one company runs into problems, the others in that space can pick up the slack. No more "Too Big to Fail".

itsrobforreal 3y ago

Yes, absolutely. Company B would have to compromise the service and change the rules. Company B can instead spin up its own business and ask Company A to advertise for them, but anything else is just selling out users.

hcal 3y ago

I'm not advocating for banning M&As, but I think that could be addressed by only allowing acquisitions under specific bankruptcy conditions. Again, though, I'm not advocating for that position. I'd hate to spend part of my life building a business and not be able to cash out when the time comes for me to retire.

Curvature5868 3y ago
Is it possible for private companies to pay dividends? Let's say you retire and you own a portion of a small but thriving company. Could that company potentially provide you with dividends as a form of income?
- bstpierre 3y ago
  Yes, a private company can pay dividends. Or you could loan it the money to buy out your shares and collect interest as it pays back the loan. Or a mixture of the two, with a thousand little variations on terms. I believe I ran into an employee-owned company once that had gone through some version of the loan scenario.
  - traviscj 3y ago
    Possible, yes, and frequently used I’m sure, but entangles the retirees financial future with the business’s future — the retiree loses if the new owners make bad decisions, overleverage, and end up defaulting / bankrupting themselves. I don’t think it’s reasonable to force all businesspeople to retain this risk after disposing of the business concern.
ClumsyPilot 3y ago
> not be able to cash out when the time comes for me to retire You can perfectly cash out by selling your business to private equity, or to anyone really. Ban on M&A just means you cant sell a social network to Facebook, but you could sell it to Microsoft, to Autodesk, to Berkshire capital, etc.
- abenga 3y ago
  Coul Berkshire Capital buy two social networks and merge them? Could Facebook form a capital holding company and buy a social network anyway?

kortilla 3y ago

They can still go bankrupt and company buys the assets without employees ever losing pay. Many bankruptcies work this way.

herval 3y ago
So the rule would be that companies can only get acquired after they go bankrupt? Would anyone ever invest in startups, in that scenario?
- JohnFen 3y ago
  > Would anyone ever invest in startups, in that scenario? Because they are expecting that the startup will turn into a profitable business, maybe? Being acquired is very far from the only way that an investor can see returns.
- meepmorp 3y ago
  There's still IPOs, isn't there? Maybe it cuts down some of the stupid money going into tech, too, which wouldn't be the worst thing. And, hey, if the business is successful, you own part of a successful business.
  - floren 3y ago
    A decade+ of acquisition as the default "exit" (and the idea that you have to be driving for an "exit" in the first place) made people straight up forget how companies normally work, apparently.
    - meepmorp 3y ago
      Seriously, why not just do something well and make a living from it? I've seen the word enshittifcation plenty lately, and it strikes me that the focus on exits and payouts is a big part of the problem. I feel old and you goddamn kids better be off my lawn by the time I get back with the shotgun.

lcnPylGDnU4H9OF 3y ago

If a blanket ban runs into this problem, what about a "ban by default"? Basically just flip the script so it doesn't require a denial based on circumstances but instead an approval based on circumstances.

fsckboy 3y ago
I like the way you think.
hakunin 3y ago
This doesn’t work in practice due to typically severe time constraints. You cannot expect a business that has 6 days of life left to wait for such an approval process. These things never happen fast.
- turmacar 3y ago
  What M&A are you familiar with that they can typically happen in a 6 day timeframe? I know this is already a stressed straw man in the first place but M&A are aren't a short simple process anyway. Adding some oversight isn't going to change that. Yes there are tradeoffs to more regulation vs total anarchy/free market. That doesn't mean they're not worth it. "Good" is not the enemy of "perfect" and all.
  - akiselev 3y ago
    > What M&A are you familiar with that they can typically happen in a 6 day timeframe? Youtube, for one: https://techcrunch.com/2011/10/30/the-entire-1-65b-acquisition-of-youtube-took-a-week-was-negotiated-at-dennys/ https://techcrunch.com/2011/10/30/the-entire-1-65b-acquisiti... Android as well, if I'm remembering correctly. They don't necessarily need to complete the acquisition in a week, just get the broad details negotiated and agreed to. Given the GP's bankruptcy example, if they thought it was worth the risk the acquirer can extend a bare minimum amount of credit to keep the company alive while they do the rest of due diligence and finish the acquisition, folding it into a breakup fee.
  - 3y ago

fsckboy 3y ago

> Company A is 6 days away from going out of business...But then Company B agrees to buy them for $1...Ban it? versus scenario 2, Company A is profitable. Company B is smaller, but up and coming. An announcement is made that A will buy B and everything will be better. Layoffs ensue, product lines are dropped, employees and customers are very unhappy, but prices and profits are up. Since scenario 2 is quite common today, and scenario 1 is relatively uncommon, yes, ban it, that's a better way to run markets. We're conducting a thought experiment here. So we think through the implications and try to figure out if there is a way to achieve benefits for all, benefits that we know exist. Don't be scared of a single negative scenario, have to look at the big picture, what is better overall. I'm glad billionaires have the freedom to build kooky submarines that other multimillionaires can climb aboard and go on dangerous adventures, sometimes ending in the ultimate sacrifice. Why a whole bunch of other people who were uninvolved engage in weeks of hand-wringing, I can't grok at all.

kbenson 3y ago
> that's a better way to run markets. I'm highly skeptical that heavily restricting buying and selling of companies in general will be a better way to run a market when it seems your goal is to prevent monopolies (or put another way, ensure competition). Laser focused policies work for a short periods but tend to be worked around quickly as the thing they regulate falls out of favor in lieu of something functionally the same but different enough it doesn't match. Blanket policies tend to stifle the market in general, causing other problems. Rather than assuming that any specific law actually "solves" the problem, we'd probably be much better off setting criteria we're trying to match and and reassessing regulations regularly to try to meet that criteria. Anything unresponsive will be routed around. The real problem is that we have things that do that (the SEC and FTC) and they're broken. We should fix them, not swap to a sledgehammer as the only tool available.
- fsckboy 3y ago
  >I'm highly skeptical that heavily restricting buying and selling of companies in general will be a better way to run a market when it seems your goal is to prevent monopolies (or put another way, ensure competition) ah, the markets I am talking about are goods and services markets. Financial markets, they take care of themselves, and at the same time garner no sympathy from the majority who don't participate in them. if monopolies emerge some other way, sure, break 'em up just the same.

wussboy 3y ago

If the market can be relied upon to determine the winners, it must also be relied upon to determine the losers. I support the "no M&A" policy.

TeMPOraL 3y ago

This example sounds nice on paper, but has anything even remotely similar ever happened, within living memory? I have my doubts. So while possible in theory, if it's impossible to happen in practice, it's not a valid counterargument to a practical proposal.

deleted 3y ago
[deleted]
adalacelove 3y ago
https://www.marketwatch.com/story/santander-buys-struggling-banco-popular-for-1-2017-06-07 https://www.marketwatch.com/story/santander-buys-struggling-...

tremorscript 3y ago

Its capitalism. Companies must die rather than become merged zombies(Soviet Style). Since this is hypothetical. Maybe the employees shall then start their own startup and get success or maybe the company was shitty anyway in the first place.

autoexec 3y ago

> Company A is 6 days away from going out of business. They will shut their doors. All employees will lose their jobs. All customers will lose access to whatever Company A does that they find helpful. If Company A was providing a service that people found helpful, someone else who is more competent at running a business will step in to fill that need. Employees will flock to the new better run business or move to some other better run business. When new companies have to step up to provide popular goods and services that were previously being provided by failing, poorly run companies, it results in innovations and new ways of doing things instead of just letting bloated industry giants continue to be propped up artificially by restricting consumer choice. Having more players in a market also increases resiliency and improves stability. If one company runs into problems, the others in that space can pick up the slack. No more "Too Big to Fail".