The Shareholder Value Myth (2013)

Re:The Shareholder Value Myth (2013) by matwood on Sunday July 15, 2018 @09:49AM (#17535210)

PE firms are like vultures. They are not going around and taking out healthy companies. Accelerating the demise of struggling companies could be argued as a good thing. Talking about Toys R Us specifically, yes a PE firm came in and finished them off, but they had plenty of problems before then. Video games used to be a huge revenue driver for TRU, but the move to digital downloads cut TRU out of the stream (a lot like Gamestop, and what happened to Blockbuster with movies).

Then you have Amazon which is assaulting every large retailer. Who has less time to visit a store than parents? The last thing a parent wants to do is make extra trips to stores when they do not have to.

When I heard about TRU going under recently, I was surprised. I had assumed they already went out of business years ago because of Amazon.

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Re:The Shareholder Value Myth (2013) by jonhendry18 on Sunday July 15, 2018 @11:29PM (#17538549)

"Talking about Toys R Us specifically, yes a PE firm came in and finished them off"

No. Bain, KKR, and Vornado took TRU private in 2005, in the process loading up TRU with debt. TRU was spending $400 million a year for paying off that debt, money which would have undoubtedly helped had it been invested in online operations or store refreshes, etc.

The private equity firms hoped to dump TRU on the market with an IPO, which TRU filed for in 2010 but that never took place, probably because it was crippled with debt by the geniuses who did the LBO.

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