FanDuel founders to receive no cash from sale to Paddy Power Betfair

Re:FanDuel founders to receive no cash from sale to Paddy Po... by srtjstjsj on Monday July 09, 2018 @02:59AM (#17488429)

Not necessarily. One pattern of PE is to buy a company, make the company borrow money, spend that money on the PE firm's other interests, and then declare bankruptcy to discharge debts.

https://en.wikipedia.org/wiki/Corporate_raid

Wikipedia has a nice overview of the topic of this thread:

https://en.wikipedia.org/wiki/History_of_private_equity_and_...

and of course KKR was the most famous corporate raider in America:

https://en.wikipedia.org/wiki/Barbarians_at_the_Gate:_The_Fa...

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Re:FanDuel founders to receive no cash from sale to Paddy Po... by sonnyblarney on Monday July 09, 2018 @03:21AM (#17488514)

If you own a company you can do what you want with it, so I'm not sure the term 'corporate raid' always applies.

And yes - as part of the acquisition, it's usually loaded up with debt, which is the weird reason why a company should always take on debt (if they are cash flush, then 'raiders' can borrow money to buy the company and load up up with debt since there is room for it).

If you mean 'reputation' - well - yes, if you sell to a known 'raider' well, then they'll do as they please.

As far as 'spending on their own interests' - well that actually can create problems as minority shareholders can sue.

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Re:FanDuel founders to receive no cash from sale to Paddy Po... by mrunkel on Monday July 09, 2018 @03:45AM (#17488596)

Amusingly, this is the exact strategy explained by Ray Liotta's character in "Goodfellas" when the restaurant owner gets in bed with the Mob. Somehow it's illegal there.

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Re:FanDuel founders to receive no cash from sale to Paddy Po... by sonnyblarney on Monday July 09, 2018 @09:11AM (#17489906)

Corporate raiding is not money laundering.

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