Ellett Brothers, until a couple of years ago, the largest firearms distributor, has filed for bankruptcy. They are the second major distributor to fail in the last couple of years. The first was Acusport. EB had bought Acusport's physical assets, especially their automated warehouse. I've noticed the last several months that they never had anything in stock.
It's the kind of B.S. that occurs when you get corporate "Brain Trusts" comprised solely of MBA bean-counters running corporations. All they care about is how to make the stockholders happy so they can get bigger bonuses. They don't give a scheit about the customers nor their employees.
Borrow money and then just give it to investors to make the dividends larger and thus increase stock prices, lining the corporate "investment group" pockets? Typical behavior, IME.
IMHO, MBA bean-counters should not be allowed to run corporations. They should be advisors. Nothing more. They focus on "inward-facing" policies, instead of "outward facing" ones, and forget that, irrespective of how they make money, they are still in the "people business". I see it every day and have suffered the consequences more than once.
Everyone does, but they don't recognize what they are experiencing. Experience poor "customer service" at a big box store such as Lowe's? Thank the corporate MBA bean-counters who emphasize cutting costs at the expense of hiring and retaining good employees. Thank the store managers who follow those rules so they can get bigger bonuses by keeping employee costs down.
When you watch "investment groups" (invariably run by same MBA bean-counters) buying businesses such as Ellett Brothers, notice that they really don't GAS about the people working there, nor the customer base. All they want is the money the company can make for them and the first thing they do is "reorganize", thus destroying the institutional system that created such a profitable business in the first place. Quality is most often sacrificed and quantity is substituted to keep the profit margins acceptable.
Off my soapbox now, it's time to get back out in the desert.
Yep... got bought out and then leveraged the company to the hilt and instead of putting the borrowed money in the company, it went into the big wig's pockets... disgraceful.
Singer sewing machine is a perfect example, when taken over I believe they had over a 100 mil in cash when cut lose were something like a 120+mil in the hole. Somebody got rich!! Cheers NC
Looks like another one of those deals where the parasites get into the drivers seat, run the company into the ground without breaking any laws, and after lining their pockets they walk away fat and happy. Welcome to the shady side of corporate America.
Every distributor (and manufacturer) bet on the wrong side in the 2016 election. The manufacturers were running 24/7/365 and the distributors were ordering like crazy. The one article said that EB had to clearance guns at low prices because of too much stock but I never saw it. I am on their site on an almost daily basis. It seems the problem wasn't the overstock but the fact that money that should have gone towards paying the bills was being syphoned off.
Got friends that worked at Ellett and Acusport from my days in the gun biz. Bad things happen to companies bought out by private equity groups...ought to be illegal.
The definition of how to run an old profitable company into the ground in short time.
Geno
This ^^^^^^^
Originally Posted by Godogs57
Got friends that worked at Ellett and Acusport from my days in the gun biz. Bad things happen to companies bought out by private equity groups...ought to be illegal.
And this ^^^^^^^
Unfortunately, totally legal... Last PE owned company that I worked for, the PE group would call the Controller at month end and tell her how much money to send to the PE firm. Afterwards, she and the other exec's would play the game of "Which suppliers do we pay this month?"...
Will suck the life and morale right out of an organization...
I used Acusport and Davidson’s a lot but only occasionally used Ellett Bros. Ellett bros were expensive compared to the others and seemed to be too big and corporate like for my taste. They had a catalog that weighed 80lbs and rarely had anything I wanted in stock but were happy to put it on my “wish list” and call me in a couple years when it came in.
I went to a trade show that Acusport hosted in Billings and spent a small fortune at that one. I got to meet the saleswoman I’d been dealing with for several years in person and we went out for drinks after the show. She wasn’t bad looking at all and was a couple years older than I was but boy was she forward. I had to decline her advances several times that night and finally excused myself altogether because I was getting very uncomfortable with the direction of the conversation. She had recently been married but didn’t seem concerned about keeping the vows I assume she took. About a year later she was traveling around to “visit her accounts” and stopped by my shop. She wanted to go out for drinks again after closing but I didn’t want to be in an uncomfortable position again so I made an excuse as to why I couldn’t go. It was a few months later that I was assigned a different salesman. I wasn’t interested in cheating on my wife despite the safety of the relative anonymity.
If some of the allegations in the lawsuit prove to be true, (see Slick Willy video, does any lawyer "prove" anything?) and therefore to be illegal in the eyes of the court, then you'll have an answer to your question. If the charges are not substantiated, I guess one could say they were "playing the system".
Yes, it's called Capitalism. And perhaps in the eyes of some of us it's the ugliest aspect of it.
Union? Let's just say I have some pro-labor leanings at times. Other times labor makes mistakes (illegal actions?) every bit as reprehensible as some of the allegations outlined in the suit against the private equity company that appears to have ruined a major player in the firearms field.
While I can not concisely articulate it, I know the difference between Capitalism and GREED when I see it. The situation with EB, if accurate, is pure unadulterated GREED. Having the PE firm bleed EB dry of cash, and then saddle them with an insurmountable load of debt, in my eyes, is no different than the politicians going to Washington DC and lining their pockets with cash while saddling the American citizens with an insurmountable load of debt. Both are legal. Both are wrong.
Bean counters are also who we have so much junk in the market place. They look at products as units, not the actual item. They cut quality to save nickles and times on each unit x annual production. Big money to them.
We buy a pair of jeans for $25. They saved 10 cents shortening the zipper, 10 more using cheap rivets. 20 cents thinner fabric. 5 cents on thread. A quarter on cheap labor. They saved 70 cents x 1 million pair=$700,000. They are proud
I wasted $25 on my jeans, the zipper won't go down far enough, and may break, either the fabric tears at the seam, or the threads break. F'n junk. I gladly would have paid $26 for something worthwhile.
If engineers ran the companies, products would be like the 1950's, much more expensive, but quality that would last forever.
If the factory workers made the decisions, we would get a balanced product. But hell floor workers are the dumbest people in the building.
Some years ago, some of our graduate business schools, starting with Princeton, initiated a major entitled "financial engineering". Essentially meant taking control of a solid company, pulling out all the cash and replacing it with debt, often beyond reasonable levels These "financial engineers" went even further by creating new forms of debt, such as derivitives, that obfuscated the risk/return relationship, and that damn near no one truly comprehends. Been responsible for wicked loss of jobs, careers, and some companies that were real contributors to the American Dream. The amount of money in play is well beyond what most of us can comprehend. One of the first to step over the line, Michael Milken, was fined over a billion dollars and given jail time. He wrote a check for the fine, and remained wealthy.
Pardon my ignorance, but why can’t manufactures distribute their own stuff?
The only firearms manufacturer that I'm aware of that does its own distribution is the Benelli group (Benelli, Stoeger, Franchi, Uberti). It's a pain having to deal with them since they don't have a website and you have to call them on the phone to order anything.
A South Carolina gun and sporting goods distributor is filing for bankruptcy amid allegations of mishandled funds borrowed by its majority owner.
There have been lots of cases of companies going under because of misdeeds totally unrelated to the business. I used to work for one of the nation's 3 largest trucking companies. It was bought out by a large holding company and the new owner then skimmed millions to pay off the mob and stay alive. He went to prison but it put 7000 people out of work.
most of the time the companies that are bought out...….aren't run into the ground by bad management ….they are run into the ground by good management...
that is the reason they are bought out....to run them down...…...700lh said it all.....bob
most of the time the companies that are bought out...….aren't run into the ground by bad management ….they are run into the ground by good management...
that is the reason they are bought out....to run them down...…...700lh said it all.....bob
Exactly. It sounds counterintuitive to a layman, but it's not good for a company to have a lot of excess cash laying around.
Some years ago, some of our graduate business schools, starting with Princeton, initiated a major entitled "financial engineering". Essentially meant taking control of a solid company, pulling out all the cash and replacing it with debt, often beyond reasonable levels These "financial engineers" went even further by creating new forms of debt, such as derivitives, that obfuscated the risk/return relationship, and that damn near no one truly comprehends. Been responsible for wicked loss of jobs, careers, and some companies that were real contributors to the American Dream. The amount of money in play is well beyond what most of us can comprehend. One of the first to step over the line, Michael Milken, was fined over a billion dollars and given jail time. He wrote a check for the fine, and remained wealthy.
^^^^^ Excel Spreadsheet management^^^^^^^^^^^^^ over leveraged companies.
I used Acusport and Davidson’s a lot but only occasionally used Ellett Bros. Ellett bros were expensive compared to the others and seemed to be too big and corporate like for my taste. They had a catalog that weighed 80lbs and rarely had anything I wanted in stock but were happy to put it on my “wish list” and call me in a couple years when it came in.
I went to a trade show that Acusport hosted in Billings and spent a small fortune at that one. I got to meet the saleswoman I’d been dealing with for several years in person and we went out for drinks after the show. She wasn’t bad looking at all and was a couple years older than I was but boy was she forward. I had to decline her advances several times that night and finally excused myself altogether because I was getting very uncomfortable with the direction of the conversation. She had recently been married but didn’t seem concerned about keeping the vows I assume she took. About a year later she was traveling around to “visit her accounts” and stopped by my shop. She wanted to go out for drinks again after closing but I didn’t want to be in an uncomfortable position again so I made an excuse as to why I couldn’t go. It was a few months later that I was assigned a different salesman. I wasn’t interested in cheating on my wife despite the safety of the relative anonymity.
A familiar story. Sometimes what comes out of a buy-out is much better company that now has resources to expand it's business and sometimes they are exploited and cannibalized. When the Ellet brothers in this case or a family or an entrepreneur builds a company then takes it public or sells it they have to accept that they have largely lost control of their creation. Witness what has happened to Cabelas. The family went public and they were able to expand to stores far beyond Sidney and Kearney, which was great in many ways, but the purchase by Bass Pro or some other company that could come up with the cash to buy them was largely inevitable. We are poorer as a sportsman community for it but that's capitalism.
What may be the outcome here? (as has happened before). A group of investors that really care about the gun business gets together and buys the remains (debt, contracts, facilities etc.) as a private entity, runs it smartly and builds it back up and runs it like the family did. At some point though they, or their heirs, will sell it and the cycle (potentially) starts over.
Winston Churchills quote about Democracy is equally applicable to Capitalism. I am glad I live with no other economic system, warts and all.
Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time.…
LBOs aka PE’s have the acquired Finance their own buy out and banks that lend quickly collect fees and dump the risk to other Investors. Who’d be foolish enough to leverage their own healthy company? The ones collecting 150% of value or better including the single owners the employees were loyal to for decades. Then a dividend is paid resulting in a 4x or greater payback to the LBO Firm who only put up 5-6% anyway. It’s not about earnings, markets, etc. It’s about what a prior Poster pointed out as Financial Architecture basically. Employees, Customers, and some Stock Holders pay the price. I don’t recall the exact figures but a large part of manufacturers are PE owned and the debt maturing is akin to the Housing Crisis in ‘08 or so some Analysts say. Who would invest in these “Hot Potatoes”? Your pension funds that need high yield returns to stay solvent though some data suggests over the entirety the return is below a basic CD, not even close to the 20+% Pension Funds hope for/need/are sold on
I am glad I live with no other economic system, warts and all.