<story><title>How Not to Negotiate a $6.1B Deal</title><url>https://www.bloomberg.com/news/features/2018-05-24/how-not-to-negotiate-a-6-1-billion-deal</url></story><parent_chain><item><author>avs733</author><text>It seems like it would be an all around benefit to the economy to disrupt the model that hedge funds use to invest in companies. Obviously access to capital is important. Obviously there are companies that benefit from more efficient operations (e.g., the Olive Garden drama of years past...BREADSTICKS). However, I cannot seem to find any benefit in allowing a hedge fund to charge for services to a company it has taken over. To buy a company with the pure goal of extracting any short term value with the intent of destroying it seems to be a long term societal ill that should be regulated out of existence.</text></item></parent_chain><comment><author>computator</author><text>&amp;gt; Olive Garden drama of years past&lt;p&gt;Ahh, Olive Garden. I hope you won&amp;#x27;t mind a slight tangent involving Olive Garden, one of Paul Graham&amp;#x27;s essays, and a sneaky business deal:&lt;p&gt;In one of his essays[1], Paul Graham wrote, &amp;quot;I think most businesses that fail do it because they don&amp;#x27;t give customers what they want. Look at restaurants. A large percentage fail, about a quarter in the first year. But can you think of one restaurant that had really good food and went out of business?&amp;quot;&lt;p&gt;Yes, I can name a restaurant that had really good food and went out of business -- it was all of the Olive Garden locations in Ontario, Canada, about 15 years ago. They were always busy, &lt;i&gt;always&lt;/i&gt; had a line-up to get in, and pretty much everyone I knew liked the food a lot. Then suddenly, without explanation, all of the Olive Gardens in Ontario shut down.&lt;p&gt;Much later I learned that Olive Garden USA had shifted some large debts to its Olive Garden Canada subsidiary, and allowed the Canadian subsidiary to go bankrupt, freeing the parent corporation of the debts. (So businesses fail for odd reasons even when they have excellent products and masses of loyal customers.)&lt;p&gt;[1] &lt;a href=&quot;http:&amp;#x2F;&amp;#x2F;www.paulgraham.com&amp;#x2F;start.html&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;www.paulgraham.com&amp;#x2F;start.html&lt;/a&gt;</text></comment>
<story><title>How Not to Negotiate a $6.1B Deal</title><url>https://www.bloomberg.com/news/features/2018-05-24/how-not-to-negotiate-a-6-1-billion-deal</url></story><parent_chain><item><author>avs733</author><text>It seems like it would be an all around benefit to the economy to disrupt the model that hedge funds use to invest in companies. Obviously access to capital is important. Obviously there are companies that benefit from more efficient operations (e.g., the Olive Garden drama of years past...BREADSTICKS). However, I cannot seem to find any benefit in allowing a hedge fund to charge for services to a company it has taken over. To buy a company with the pure goal of extracting any short term value with the intent of destroying it seems to be a long term societal ill that should be regulated out of existence.</text></item></parent_chain><comment><author>bcoates</author><text>Lots of companies with lots of value are dead or irreversibly dying (that is, saving them would cost more than the entire value of the saved company).&lt;p&gt;There&amp;#x27;s nothing wrong or strange about firms specializing in extracting what can be salvaged out of the these. It&amp;#x27;s not more short-term or long-term specific than any other decision owners make about companies -- carving out viable business units that can be spun off and sold is a fundamentally long-term proposition (for the buyer and society). It&amp;#x27;s not all Michael Douglas defrauding overfunded pensions.</text></comment>