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32. Re: Out of the Blue Nov 29, 2012, 15:12 Beamer
Cutter wrote on Nov 29, 2012, 15:03:
Beamer wrote on Nov 29, 2012, 11:39:
I don't get your first point. They cannot get unemployed immediately - it's more or less impossible to sell this company without these guys. They're the ones that have actually been running it - they're needed to run it in the time being and whoever buys it will want to spend considerable time speaking with them as part of due diligence. There's more or less no way to move forward with this company without having many of these people in place.

Wrong. First off it's going to be a fast sale and everyone knows it. And you don't need these guys. It's why the union is asking for an independent trustee and they're right to do so. The CEO brought on board for this is making $125,000 a month? That's ludicrous by any stretch. That would pay the salary of 40 bakers for that company.

Hostess is a fantastic example of a poorly run company, of a product no one wanted anymore, of a company crippled by pension payments, and of greedy management calling everyone greedy but themselves.
But you cannot sell Hostess without overpaying its key people to stick around. Notably, the CEO doesn't have to be one of those people. Odds are whoever is buying doesn't have any interest in talking to him.

2.4 billion in sales a year is a product no one wants? Crippled by pension payments of a paltry 1 million per month? No, the only thing you got right is that is was poorly run and raided by a bunch of white collar crooks which is always the case. The working man isn't the problem, never has been, never will be.

You're fighting the wrong guy here. And you're wrong.
1) I keep repeating that bad management, compounded by the revolving door of CEOs, killed this company first and foremost. But yes, pension plans were a problem. And yes, the rapidly declining sales are a problem. 2.4 billion, but declining. Twinkies and white bread don't sell like they used to and are unlikely to ever do so.

2) No. You do need these guys. Sorry, Cutter, you've never been part of an M&A process. The buyers want three things: 1) numbers 2) someone to explain the numbers 3) someone to explain to them what the company has been doing, why they've been doing it, and how it's turned out. Yes, they can get those numbers from anyone (though you need people that know how to present them, and even know what numbers are needed), but #2 and #3 can only come from the guys inside the company. Exclusively. Any buyer will want significant time with these guys. We're talking weeks spent attached to the hip of these guys. If some of these guys walk away the potential buyer won't have that. If he doesn't have that he'll have pages of documents full of unanswered questions. If he can't answer questions he won't pay as much for it.

3) Never say never. Remember, the unions aren't led by "working men," they're led by union leaders. History is full of examples of their corruption bringing things down due to greed. And sometimes it isn't the union bosses - go rent American Dream and see how the consultant the union members hired, against the wishes of the union, caused those union workers to all lose their jobs, while what the union bosses had recommended would have solved it. And sometimes it's both - just look at the UAW in the late 70s and early 80s. Plenty of union boss arrogance and greed, and as a result plenty of workers doing intentionally poor jobs and creating cars with plenty of failures. Management wasn't innocent in any of this, particularly the faults of those poorly-designed-and-manufactured bosses, but Cutter, when you fall solely on one side (e.g., "the working man is never, ever wrong") you're probably wrong.
Music for the discerning:
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