For some reason I was searching for pens on eBay. They have lots of pens for $1500, that's pretty crazy.
Then I found this
Then I found this
Problems at work maybe?
- Thread starter 95NSXT
- Start date
He's from Mason, Ohio. Any idea what he is rambling on about?
Juice said:
In March 1998, a management team supported by JLL Partners, a private investment firm with committed capital of $2.2 billion, acquired Builders' Supply & Lumber Company.
Now a holding company is formed and -
"On February 11, 2005 we entered into a $350.0 million senior secured credit facility with a syndicate of banks. With the proceeds from these transactions, we repaid existing indebtedness and paid a $201.2 million, or $8.00 per share, dividend to stockholders" (i.e. JLL Partners)
"On May 24, 2005, our board of directors and our stockholders approved a 1-for-10 reverse stock split of our common stock. After the reverse stock split, effective May 24, 2005, each holder of record held one share of common stock for every 10 shares held immediately prior to the effective date. As a result of the reverse stock split, the board of directors also exercised its discretion under the anti-dilution provisions of our 1998 Stock Incentive Plan to adjust the number of shares underlying stock options and the related exercise prices to reflect the change in the share price and outstanding shares on the date of the reverse stock split. "
Classic New York swoop & loot - no money left for salaries and pensions in Mason, OH and if you got stock option...you do'nt have to buy Charmin
Ski_Banker
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mindretch said:
Classic (location???) ignorant comment.
-The $201.2MM special dividend leveraged recap? Don't see any problems there - every day typical in a low interest rate environment. You must also object to people taking second mortgages and home equity loans since those are EXACTLY the same thing.
-The "new holding company" is to facilitate the 26% equity sale to Warburg Pincus. Different PE shop, potentially different interests, requires a new company. Probably a tax free transaction too, unlike JLL selling Warburg those shares directly for cash.
-The option plan adjustment just keeps managements' stock options at par with their value before the reverse stock split. Doesn't hurt or benefit anyone.
As for the pissed off employee, except in a liquidation (very rare) or merger (which this isn't), the only people that get fired are those that aren't doing a good job or are on the payroll as the boss's idiot nephew, etc. One private equity shop selling part ownership to another private equity shop will have almost NO EFFECT on the underlying company of that size. Even in a merger, the people that are usually laid off are management since you don't need 2 accounting departments, 2 marketing departments, 2 sets of senior executives, etc. Pretty uncommon to lay off people that "produce" the good or service - otherwise a company is abandoning the very thing it just purchased. So, while I feel for the Ebay guy that fears losing his job, there is a good chance that his frustration is more than just from "being an innocent Company Man losing his job after years of dedication." In this type of transaction, in fact, I am almost certain of it.
"Classic New York swoop & loot" -- this has such a nice ring, doesn't it? Almost sounds like something a politician would say to galvanize people.
Well galvanize this - you're a F**king idiot. You don't have the first damn clue what you are talking about.
Ski_Banker
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:redface: Hmmmm. Hope my avatar doesn't completely and totally undermine my credibility here. Perhaps Mindretch isn't the only idiot. :wink: Gordon Gekko I am not...
Boy, you sure are a smooth talker.Ski_Banker said:Well galvanize this - you're a F**king idiot. You don't have the first damn clue what you are talking about.
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Did this thing hit a nerve or something Mr. Banker?
Ski_Banker
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RED/BLACKUK3.2 said:
Haha, yeah apparently. There is just an aweful lot of misconception about M&A and private equity, and these types of ignorant comments only exacerbate the problem.
Not to say that what Mindretch is referring to never happens - this just isn't one of those situations. Moreover, no private equity shop wants to "milk a company" by leaving nothing for Charmin for two reasons: 1. A functional company is always worth more than a disfunctional one (so you don't lay off people in order save on a few months of payroll) and 2. The PE shop would develop a terrible reputation in the business community and no one would want to deal with them in the future. A PE firm will always try to streamline a company, in the same way that management consultants try to improve things. But not at the expense of the company's long term viability.
The 1985 Wall Street Gordon Gekko takeovers (from private equity shops) are a thing of the past.
Ski_Banker said:"Classic New York swoop & loot" -- this has such a nice ring, doesn't it? Almost sounds like something a politician would say to galvanize people.
Well galvanize this - you're a F**king idiot. You don't have the first damn clue what you are talking about.
"F**king idiot"?
No it's just MindRetch :tongue: - Did you expect comprehensive analysis in an off-topic forum? The Cross Pen of Manson, OH obviously feels he got screwed. Maybe he did; the world ain't fair, sometimes it is downright crooked. Certainly the company is thinly capitalized by comparison to its position at the end of 04. That will impact salaries all by itself.
Have the ethics of private equity improved since the mid eighties? Now Mike Milken seemed less than trustworthy, so I screwed him first. But your avatar looks like a great guy and all - so, please share with us the adjustments to the number of shares of management's stock options and the related exercise prices that we may judge for ourselves.
Ski_Banker said:
Except that last year was almost a record for private equity takeovers.
Ski_Banker
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mindretch said:"F**king idiot"?
The Cross Pen of Manson, OH obviously feels he got screwed. Maybe he did; the world ain't fair, sometimes it is downright crooked. Certainly the company is thinly capitalized by comparison to its position at the end of 04. That will impact salaries all by itself.
Have the ethics of private equity improved since the mid eighties? Now Mike Milken seemed less than trustworthy, so I screwed him first. But your avatar looks like a great guy and all - so, please share with us the adjustments to the number of shares of management's stock options and the related exercise prices that we may judge for ourselves.
No, of course I didn't expect a comprehensive analysis (nor have I in any way done one either). My comments are based on 15 minute look into this series of transactions. They are also based on the complete lack of connection between "swoop and loot" and the leveraged recap and options comments.
True, the company is more thinly capitalized now than before the recap. BUT, the additional leverage came from an increase in SENIOR SECURED debt. If, post transaction, the company was anything less than adequately capitalized, the senior lenders would not do the deal (and you would see something like "additional SUBORDINATED debt in the amount of ___ was obtained".
While "F**king idiot" is not applicable to your not unintelligent response, "Ignorant" is still correct. To fix that ignorance, I suggest reading up on "Going Concern" value versus "Liquidation Value". The former is always higher.
Just ask yourself, if the company was in jeopardy: Would the senior lenders INCREASE their exposure to it? That applies to all aspects of this deal, because the senior lenders will ONLY increase exposure if they are positive that 5-10 years down the road the company will still operate profitably and pay them back.
Payroll reductions without layoffs are by far the most difficult efficiency to implement, because even a 5% pay cut will kill moral unless you have one hell of a CEO. You kill moral and you jeopardize the "going concern" of the business and the senior lenders get really nervous. As for adjusting management's options for the reverse stock split - what happens to morale and financial performance if you screw the management of your own company? Only if every existing manager/executive is about to be replaced by a new outsider would that even be considered.
Warburg Pincus is making an INVESTMENT in this firm, with the hopes that they can sell their investment in 4-7 years for a lot more than they paid. That only happens if the business is improved.
Finally, this business has been private equity backed since 1998. The real change for any company (public or private) happens when a sponsor is initially brought into the fold (new oversight, productivity improvements including replacement of weak employees if necessary). Adding another private equity shop to the mix doesn't change much, and, generally, one PE shop selling a portfolio company to another PE shop won't change too much either.
IN REPONSE TO LEFTLANE
True, private equity deals are at record levels which is a trend that will continue for years and years to come, with peaks and valleys. Let me rephrase your wording, however, from "takeovers" to "transactions". There have been, to my knowledge, NO recent public-to-private "takeovers" by private equity firms, although CSC may have been hostile when rumored - not sure. There have been multiple hostile deals from corporations (strategic buyers), however, with Oracle's takeover of Peoplesoft making headlines. Strategic buyers can risk buying a company with alienated employees because often there is a "must have" reason behind buying a technology or competitor. Financial buyers could care less - so why go through the hoops of a hostile LBO and then have to deal with the consequences of owning a wounded company (that probably spent millions on lawyers protecting itself and is now worth less as result)? In the eighties, there were businesses with such low stock prices that a hostile deal could make economic sense (they thought at the time). Some were bought to be liquidated for the same reason. Could it happen now or again? Possibly, but not too likely. Also, PE shops are more experienced now and aren't doing deals that failed in the past. LBO returns from the mid-80's to the early 90's were miserable because stupid deals were done.
To my final point (damn this is getting long
): Someone has to sell the stock to a financial or strategic buyer. Nearly all PE deals are purchases of private companies, which means that whoever owned the company gets to make the decision to (A) sell (B) for how much and (C) to whom. Also, there is more competition for deals, amongst PE shops, than ever before so private equity fund reputation is critical to getting new deals, unlike in the 80's. So, yes, the vast majority of private equity funds act with integrity in their business dealings. They have to, or they won't be a "Going Concern" either.To Mindretch - I apologize for calling you a "F**king idiot" since that clearly is not the case. Just ignorant of these goings on. It's not a transparent industry so you join the other 99% of the population through no fault of your own IMHO. As for the stock option adjustment, if you wish to continue this discussion, I invite you to grab the SEC EDGAR filings and prove to me/Prime that management was screwed due to the reverse split adjustment. I am curious about your Michael Milken dealing, if you were being serious - please post or PM me about that.
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Can I just say this is a really interesting thread, and it is really nice to see a response made in the heat of the moment considered, explained and withdrawn. There a a few people on Prime lately who could learn a thing or two from this thread in more ways than one.
Also as an aside, is it because I'm a) stupid, b) not into banking or c) British that I don't get the 'Milken' references...just curious?
Also as an aside, is it because I'm a) stupid, b) not into banking or c) British that I don't get the 'Milken' references...just curious?
ok, so... since this is apparently a multiple choice, shouldn't there be "d) all of the above"?RED/BLACKUK3.2 said:
(just having a little fun
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Oi! Well OK then...who is he though??? I'm still thinking 'a' should have covered it pretty well ;-)
