4 ms·
Instead of leveraged buyouts, we now have layoff buyouts. Acquire firm, minimise headcount, keep lagged revenue on existing assets and IP for 5 years while reap
by evrimoztamur 3y ago
Instead of leveraged buyouts, we now have layoff buyouts. Acquire firm, minimise headcount, keep lagged revenue on existing assets and IP for 5 years while reaping profits on 90% margins.
- browningstreet 3y agoSometimes it’s right to give up on the dream /s
- iforgotpassword 3y agoSame as: acquire renown company making a solid product, substitute product by something from China at a fraction of quality/cost, still charge the same for the next couple years until word has spread.
- nextworddev 3y agoExamples?
- Tanoc 3y agoKodak Print for one. Kodak Print was spun off into a holding company called Kodak Alaris who then sold it to a Chinese investment firm who aren't doing anything with it other than constantly increasing prices to squeeze hospitals and university labs.
- solarkraft 3y agoPyrex is notorious for this. The whole brand used to be about it being borosilicate glass, but they substituted it for standard glass which - surprise - shatters under thermal stress.
- kylecordes 3y agoThis is so frustrating - Pyrex isn't itself anymore. Is there any brand that still sells kitchen glassware made like Pyrex used to be?
- gnicholas 3y agoWe've also noticed that the top of our pyrex containers flake off shards of glass. We buy Anchor now, and it seems better.
- iforgotpassword 3y agoAfaik, There's actually Pyrex and PYREX. The latter being European and still making them properly.
- voganmother42 3y agoCraftsman tools
- sidewndr46 3y agoif you're talking about hand tools, they've always been average quality at best. The real advantage has been the warranty, which from what I understand is still honored. Craftsman power tools are absolute joke and might as well have a fisher price logo on them.
- grogenaut 3y agothe replacement ratchet I got from craftsman (lowes) to replace my small (1/4?) drive for free is much much better than the one i bought originally in 2010.
- voganmother42 3y agoCraftsman is interesting because its been there and back again
- donmcronald 3y agoSharp TVs
- Yodel0914 3y agoThe vast majority of the HiFi industry
- earthscienceman 3y agoSoon to be moog
- OJFord 3y agoWell, very simplistically, yes it is correct and should be expected to reduce headcount post-acquisition, that is the GCSE ('grade school') business studies answer: there are core functions which are non-linear in business growth if you like; that have an 'absolute' requirement but without a marginal need to grow as fast as the rest of the company. Thus an acquired company that is well-integrated doesn't need its payroll department any more, say. And you don't buy out a company entirely because you like the way it's running(^) and just want all the profits for yourself. You buy it as a company because you think you have some kind of 'synergy' with it, or as an individual because you think you have better ideas for it; in either case you have some change to make that makes it worth more than it's present market valuation. It would be weird for an acquisition to result in no change. (^So you like everything except think the dividend should be higher, I suppose.)
- jamesTee49 3y agoIf there are overlaps, headcount reductions of those overlap make sense. Furthermore the takeover company must have extremely efficient existing staff with maybe 20-40% spare capacity to take over. I have seen multiple takeovers with overworked of inefficient existing staff before takeover. The takeovers destroyed that acquired business within 3-5 years simply because they dont have the people to run it after firing the previous efficient and well-trained staff. In fact their own existing staff quit because felt underpaid with the extra tasks due to let go staff. Double whammy. Overlapped staff like managers and sub-c suites still retained....which could easily cost about 20-30% of the salaries of those retrenched workers. They are also the absolutely most incompetent one that drove the business to failure. After 25years seeing how mergers ended up I come to the conclusions: #1 MBA schools are absolutely wrong about the benefits of mergers (always dont trust MBAs, if they are that good, they run their own business), #2 there is no such thing as companies synergism from mergers (but MBA called it "if realized" which simply doesnt exist in reality but might hinted on paper), and #3 the person approving mergers never have any management education and a lot not even having MBAs but fully trust some MBAs wearing nice suit especially giving off London English or behave like Steve Jobs demeanor.
- MuffinFlavored 3y ago> 90% margins source/citation required?
- ojbyrne 3y agoA recent income statement is here (on page 6): https://www.vmware.com/content/dam/digitalmarketing/vmware/en/pdf/earnings/vmw-earnings-release-nongaap-q423.pdf https://www.vmware.com/content/dam/digitalmarketing/vmware/e... tl;dr Margin (operating income / total revenue) is about 15%.
- MuffinFlavored 3y agoSo the parent of this comment claiming "keep lagged revenue on existing assets and IP for 5 years while reaping profits on 90% margins" is wrong by a huge amount, right?
- solarkraft 3y agoNot if they fire almost everyone (Twitter style), I suppose.
- UncleOxidant 3y agoIsn't that what private equity firms been doing forever?
- undersuit 3y agoWhen did Broadcom become a private equity firm? I thought they baked pies.
- vikramkr 3y agoNo they didn't become a private equity firm, a private equity firm's roll-up firm bought the old broadcom and took the acquisition target's name. They didn't change the ticker though it's why they're still AVGO on NASDAQ. Looks like KKR and silver lake were the private equity folks that created avago which started rolling all these firms including broadcom whose name it took
- slt2021 3y agoSilver Lake was also partner of Michael Dell in taking Dell Computer Corp private (while keeping VMware public) and they did all sort of financial machinations to screw VMWare shareholders
- deleted 3y ago[deleted]