Bavaria in administration?

[pandroid]

Re: Bavaria in administration

Answering the 3 blocks above separately:
1. We might be at crossed purposes. I said "invoked" meaning to use the rights that the FA gave them. Nothing to do with infringement......

Blimey. I thought I was logged on to a Sailing Forum, but I seem to have logged onto Mumsnet by mistake.

 

[jfm]

Re: Bavaria in administration

Blimey. I thought I was logged on to a Sailing Forum, but I seem to have logged onto Mumsnet by mistake.

Actually this thread was evicted: it was on mobo forum then the mods/admin moved it here. Anyway, what an odd comment you make. I like Elecglitch's posts but I thought he was being a bit punchy when he wrote #78. Having now read your post , I'm not so sure.

 

[Blue Sunray]

Re: Bavaria in administration

Actually this thread was evicted: it was on mobo forum then the mods/admin moved it here. Anyway, what an odd comment you make. I like Elecglitch's posts but I thought he was being a bit punchy when he wrote #78. Having now read your post , I'm not so sure.

Blimey and there was I thinking it was one of my more restrained offerings.

 

[Jamesuk]

Wow, that's a shame. Still, boating is a niche market and maybe there isn't the volume of sales to support anything but the top end of the market these days.

Hallberg Rassy are not top end and they keep going, I wonder what their formulae is?

 

[lpdsn]

Re: Bavaria in administration

Actually this thread was evicted: it was on mobo forum then the mods/admin moved it here. Anyway, what an odd comment you make. I like Elecglitch's posts but I thought he was being a bit punchy when he wrote #78. Having now read your post , I'm not so sure.

I've found it's not a good idea to post on the day job here. In one case I linked to the appropriate standard and told them what paragraph covered it but was still told I was talking rubbish becuase someone in a minimum wage job that would never have had an inkling of the right answer had told them something different. There's no way you can win.

 

[jfm]

Re: Bavaria in administration

I've found it's not a good idea to post on the day job here. In one case I linked to the appropriate standard and told them what paragraph covered it but was still told I was talking rubbish becuase someone in a minimum wage job that would never have had an inkling of the right answer had told them something different. There's no way you can win.

Yep, erudite comment lpdsn.

 

[jfm]

Re: Bavaria in administration

...it was one of my more restrained offerings.

Yup, not disagreeing that.
I often mutter "Hear hear!" when I read your posts

 

[JumbleDuck]

Re: Bavaria in administration

Yup, not disagreeing that.
I often mutter "Hear hear!" when I read your posts

So, two or three comments about Bavaria keels (very traditional on Scuttlebutt) are unacceptable but five pages of completely irrelevant postings on financing LBOs are fine? Not that I object to either, you understand - it's all very educational.

 

[jfm]

Re: Bavaria in administration

So, two or three comments about Bavaria keels (very traditional on Scuttlebutt) are unacceptable but five pages of completely irrelevant postings on financing LBOs are fine? Not that I object to either, you understand - it's all very educational.

JD, I didn't say or mean that. I have no interest at all in the Bavaria keel thing. Iirc elecglitch commented that some scuttlebut posts were juvenile, and I sort of agreed with him by specific reference to the mumsnet post
I don't think LBOs are irrelevant. Bavaria underwent one of the biggest ever in this industry, then another pretty big one. More widely, ferretti, princess, oyster, Canados, fairline, sealine, sunseeker, Ancona, and others have undergone similar transactions. Bennetti Azimut, Feadship, Royal huisman all have have some private equity ownership. And so on. Surely a bit relevant. But no worries: I'm happy not to post any more on the topic

 

[dom]

Re: Bavaria in administration

Mods, these corporate finance / governance threads just don't work on Scuttlebutt. There are many possible reasons for this but who cares.

Three strikes now (2xOyster and this); so why not give them back their thread and t/f all future finance-related threads over there?

And to think of all those heated threads about rude moboers. Makes you think

 

[mcanderson]

Re: Bavaria in administration

. But no worries: I'm happy not to post any more on the topic

What a pity. I wish my original post had stayed in the Mobo forum as we could have just discussed the Mobo implications without the keel "jokes" and more emotional lines that have been posted.

Back to the mobo forum for me. I haven't missed Scuttlebutt since moving from sail to power.

 

[Uricanejack]

Re: Bavaria in administration

Most if not all the financial stuff goes whizzing by way over my head.
Interesting just the same.
To my simple mind the price of boats had just risen way faster than the average joes income.
I’m not very familiar with Bavaria boats but the ones I saw at the boat show I went to apeared to be just as modern and up to date as the other big names.
Quite a few members of this forum have chosen Bavaria boats.
I like the older style British boats but most of those companies ceased to exist years ago. Clearly they just could not complete and didn’t build boats people wanted to by at a price they could afford.
Hopefully Bavaria will regroup and continue.

I thought they were quite nice boats.

 

[MapisM]

Re: Bavaria in administration

All meant in friendly spirit of debate and I agree better discussed over a beer than keyboard! (And I restate my personal interest/non impartiality of course).

That's understood and wholeheartedly agreed, J.
So much so, that it's actually the only reason why I'm following up further, because I can't think of a way to say just "let's agree to disagree" that wouldn't come across as impolite - though I'm afraid that eventually we will have to, at least to some extent.
I just hope that sooner rather than later you'll have time to extend your summer cruises further south, up to my latitudes.
And not just for the "beer debate", mind - that won't take more than the time of a pint. The interesting part is the proper boating environment where it could take place!

Now, back to the point.
Firstly, just to reciprocate your transparency disclaimer (though I know that you are aware of this), I've also been involved with PE/LBO transactions, down to signing several Senior Facility Agreements, Mezzanines, and more other contracts than I can remember.
Something that can't be said of the PE firms partners I worked with btw, and I'm sure that you know what I mean with this.
Otoh, I can happily claim to have zero vested interest now, and that anything I'm saying is just my personal opinion, either based on first hand experience and/or understanding from other folks personally involved.
In sharp contrast, I'm aware of what the Daily Mail is and of its reputation, but that's where my Daily Mail knowledge ends.

That said, sticking to the same 3 blocks:

1. I understand that it wasn't obvious by my "exploit" wording alone, but what I meant is that through FA, it's possible to "convert the former business owner’s equity in the business [assets included] into loans so as to fund the purchase with a minimum of PE capital", with apologies to Zing for stealing his statement, aside from the bit in square brackets which I added, but a cut and paste is easier than re-writing something that he already summarized nicely.
And in spite of the fact that this is in principle illegal in many Countries, it happens on a daily basis, courtesy of legalese workarounds like newcos et all.
Therefore, whether the collaterals are eventually attacked or not is irrelevant in this respect, and I don't think you are correct when you seem to imply that the term FA can only be used when they are.
But semantic aside, I hope to have clarified what I meant.
Anyway, fwiw I agree that this life raft is almost never deployed, but only because there are better ways to abandon the ship, as with a chopper for instance... Just to stick to your metaphor, see.
Oh, and ref. auditors, let's not go there, because if we should include them in our future beer debate, a pint would be nowhere near enough, to the point of putting our livers seriously at risk...

2. I don't think I really shifted the golpoasts.
I mean, yes, Jez wrote "healthy return back while the company goes under and staff get nowt", while I told that I could think of cases (way more than 10 btw, believe it or not) where "PE shareholders left companies (and their employees, suppliers, etc.) on their knees while they managed to get away with just a few superficial scars (if that)".
Now, I appreciate that it ain't the same thing, but does it really matter?
The point which still stands is that in a PE owned Company, at the end of the day there's proportionally more at stake for its staff and suppliers than for the shareholders:
- For most staff, typically their job is all they (and often their whole family) are relying on for a living.
- For some suppliers, a company can well be their main client. In fact, a supplier going bust right after another company demise is not rare at all - possibly while some shareholders' loans are being reimbursed...
- For PE shareholders, not only the money invested to gain control of a company is a tiny fraction of what should have been (courtesy of FA), but is also a tiny fraction of their portfolio. For them, one company going bust is "just a matter of keeping that bottle of Cristal in the fridge for the next occasion", and I'm quoting as literally as I can remember it a sentence which I heard straight from the mouth of a PE firm partner.
That's akin to the old joke about the difference between involvement and commitment of pig and chicken respectively, in a bacon and egg breakfast... :ambivalence:
And all this isn't just ethically unfair, as I hope you will agree. It's a sort of ebola virus of capitalism, though I'm not hoping that you'll agree also on this.
Lastly, as for auditors, let's leave also pension funds out of this, shall we?
We were already explained by the world famous banker John Bird that it's our pension fund which suffers, not himself...

3. I'm afraid this is the part where eventually we will have to agree to completely disagree, because yes, I'd be quite happy to live in a world without C.
Not because I have an axe to grind against any folk dealing with C, mind. Well, maybe one of them if I'm honest, but after a dozen of years, that's water well under the bridge by now.
It's rather because I honestly believe that C is completely useless from a macroeconomic standpoint, if not even dangerous.
See, the world isn't getting any better if Lürssen builds more ships on one hand, while otoh my compatriots serving in the Coast Guard must deal daily with barely floating wrecks packed to the gunwale with people who see a very high risk to die in the middle of the sea as a better alternative to a life in their home Countries.
Now, I'm well aware that blaming C alone for this situation would be a massive stretch.
But C is the only method which inherently widens these structural macroeconomic gaps, if you think about it: nothing else on this planet is equally effective at making more money out of money alone, squeezing as much blood, toil, tears and sweat as possible from anyone else in the process - not to mention cheating with the P&L to massage the EBITDA before selling, which in turn can endanger the future of the company and of its stakeholders.
And I'll save you the time to reply that the whole last part should rather be described as "making companies more efficient in the process", because I'm well aware that this would be the PE's version of the story, but sorry, I can't buy it. Not anymore.
Besides, talking of stretches, saying that "we need all 4 to keep the other 3 honest" is at least on par with my previous one!
To the point that I'm not sure if you really meant what I understand from a literal reading...
Firstly, I very much doubt that there's any meaningful correlation between honesty and A vs. B vs. D, from an historical perspective.
But one thing I'd safely put my money on is that even the most remote statistical evidence of an overall honesty increase after the arrival of the newcomer C is pure fantasy.
I mean, let's face it: all of us have heard of frauds, corruption, incompetence, whatever - for A/B/C/D, the whole lot.
Otoh, C is the only system which ever fostered a Heuschrecke debate.
Not that I'm a fan of Müntefering (and neither of his party), but as they say, if it looks, swims and quacks like a duck...
Last but not least, let's not forget that all the major industrial developments took place well before C has been around.
And if we take for instance the boating industry (just to go back on topic for a moment!), I struggle to think of anything that C ever brought to the table in general - let alone in terms of honesty! :ambivalence:
Oh, and also here, there's one point of yours which I'd suggest to leave well alone, i.e. the PE shareholders discipline.
For this one, if you are really interested in some examples explaining why I think it's beyond a joke to even mention it, I'll be glad to comply - postponing just the names for the beer debate, obviously.

PS: with apologies to JumbleDuck for yet another not only completely irrelevant, but also way too long post.
Otoh, I must say that there's another point he made that intrigues me. I'll address that in a minute...

 

[MapisM]

Yeah, well, a bunch of people all saying I've-leveraged-more-buyouts-than-you might be smoking fat cigars, but they are still undoubtedly willy-waving, Particularly since it's painfully clear that only a couple actually know what they're talking about.

Wow, you must be a fine psychologist JD, because I can't for the life of me understand which are the two posters which you identified so clearly.
I take it that one is jfm, since he even declared his professional involvement before your post.
But that leaves us with just another one, while a few details posted by another couple of forumites (both of which I never met outside this asylum) came across to me as written by someone with a fair bit of competence on the whole matter.
So, I'm not asking you to name any names if you don't want to, but I'd be curious to hear about the train of thoughts behind your conclusion.

Btw, I'm leaving myself out of this, 'cause aside from not pretending to come across as someone who "painfully clearly" knows anything at all, I'm quite happy to stay in the willy wavers bunch on this specific matter.
It's a much more comfortable position, you understand. One from which you can say what you wish with as little prejudices as humanly possible... :encouragement:

 

[MapisM]

Re: Bavaria in administration

I've found it's not a good idea to post on the day job here. In one case I linked to the appropriate standard and told them what paragraph covered it but was still told I was talking rubbish becuase someone in a minimum wage job that would never have had an inkling of the right answer had told them something different. There's no way you can win.

Good point, but nobody is really posting about their job here.
Even jfm, to whom you were replying with your post, is not even scratching the surface of his job, which I can assure you that is way more complicated and sophisticated than anything we discussed so far.
I'd rather call the whole debate a sociological one, where the few technicalities which were mentioned are just incidental.
Which is what makes it (well, to myself, anyway) somewhat interesting.
You don't want to start thinking how boring a proper technical debate on PE/LBOs would be... :disgust:

 

[lpdsn]

Re: Bavaria in administration

Good point, but nobody is really posting about their job here.
...
You don't want to start thinking how boring a proper technical debate on PE/LBOs would be... :disgust:

Not half as boring as a full scale technical debate on how a mobile phone network fits together.

Maybe I should've said "...post using knowledge and expertise from the day job." Anyway avoiding it is one of the forum rules I've imposed on myself. That and avoiding the lounge.

 

[jfm]

Re: Bavaria in administration

That's understood and wholeheartedly agreed, J.
So much so, that it's actually the only reason why I'm following up further, because I can't think of a way to say just "let's agree to disagree" that wouldn't come across as impolite - though I'm afraid that eventually we will have to, at least to some extent.
I just hope that sooner rather than later you'll have time to extend your summer cruises further south, up to my latitudes.
And not just for the "beer debate", mind - that won't take more than the time of a pint. The interesting part is the proper boating environment where it could take place!

Mapism, I totally agree the above but brief replies to 1/2/3 in the meantime (and JD please avert your gaze)

1. We really have to cover this one over the beer. It isn't illegal - in most countries it is illegal unless you do certain things, but everyone does those things. Of course you can argue that the law is weak and the "things" are too easy, but that's a different debate.
I wasn't trying to say the term FA can only be used when the lifeboat is deployed. My point is simply that in relation to your view that FA and the legalese workarounds are bad, they are only bad if used. Until then they are like a liferaft for banks- irrelevant unless used. The "bad part" of FA in your view is (I think) that it puts the banks further up the queue than employees+ suppliers, but if that queue is never formed because there is no bankruptcy, then anyone's putative position in that non existent queue is irrelevant I would say. Of course the other aspect of FA is that it allows more money to be borrowed, and if that is a bad thing then surely the incremental extra debt from FA can't be the bad part and the rest of the debt be the good part, can it?. Don't you have to debate whether any non trivial amount of debt is a bad thing? I don't personally think it is, and when I was 22 I borrowed literally 100% mortgage to buy first house, but each to their own on debt.

2. "proportionally more at stake for its staff and suppliers than for the shareholders" - I'm afraid that is true of #A,B,C+D. Big public companies/PLCs, big family owned companies, perhaps most companies. Nothing at all to do with PE ownership. Comes down to a philosophical debate on how society should be run, socialism vs capitalism, etc. Definitely one for a beer not here
As an aside, PE shareholders are exactly the same folks as public company shareholders = pension funds etc. That means ordinary man on street. Difference is that with the public company model the pension funds own 1% of each company directly and thus have little control. With PE they club together their 1% holdings by handing them to a single manager, who speaks for (without owning) c 100% of the shares. Management of the company are no longer their own bosses. That's a big deal, but the look through ownership isn't different. An as another aside, the banks who lend all the debt you dislike are also owned by the same shareholders! The capital markets do not really change aggregate look through ownership; rather they salami slice the capital deployed into a business into low, medium and high risk slices, which (I would argue; you might disagree!) is a good thing.

3. OK you might be happy without C, but it feels to me like your view is one helluva tar-with-same-brush scenario based on a bad experience. The "making money out of money alone" comment really is daily mail. You might have seen that with the PE owner you worked for, but it isn't fair comment for whole sector. Industrial revolution - a large stack of today's technology was incubated and grown in PE ownership. In your world without C, where will the risk capital in early stage/growth/improvable businesses come from? You need C, I think. BTW, on risk and making money here's a statistic to reflect on: half of the PE funds ever raised in the history of the world never made any carry. Newspapers tend to report on the successful folks. Finally, I used the word "honest" contextually - "keep honest" isn't quite the same thing in EN slang as the opposite of dishonest. What I meant was just to create pressure from peers/comparables to perform well and not get slack.

Time for a beer!

 

[dom]

Re: Bavaria in administration

3. I'm afraid this is the part where eventually we will have to agree to completely disagree, because yes, I'd be quite happy to live in a world without C.
Not because I have an axe to grind against any folk dealing with C, mind. Well, maybe one of them if I'm honest, but after a dozen of years, that's water well under the bridge by now.
It's rather because I honestly believe that C is completely useless from a macroeconomic standpoint, if not even dangerous.
See, the world isn't getting any better if Lürssen builds more ships on one hand, while otoh my compatriots serving in the Coast Guard must deal daily with barely floating wrecks packed to the gunwale with people who see a very high risk to die in the middle of the sea as a better alternative to a life in their home Countries.
Now, I'm well aware that blaming C alone for this situation would be a massive stretch.
But C is the only method which inherently widens these structural macroeconomic gaps, if you think about it: nothing else on this planet is equally effective at making more money out of money alone, squeezing as much blood, toil, tears and sweat as possible from anyone else in the process - not to mention cheating with the P&L to massage the EBITDA before selling, which in turn can endanger the future of the company and of its stakeholders.
And I'll save you the time to reply that the whole last part should rather be described as "making companies more efficient in the process", because I'm well aware that this would be the PE's version of the story, but sorry, I can't buy it. Not anymore.
Besides, talking of stretches, saying that "we need all 4 to keep the other 3 honest" is at least on par with my previous one!
To the point that I'm not sure if you really meant what I understand from a literal reading...
Firstly, I very much doubt that there's any meaningful correlation between honesty and A vs. B vs. D, from an historical perspective.
But one thing I'd safely put my money on is that even the most remote statistical evidence of an overall honesty increase after the arrival of the newcomer C is pure fantasy.
I mean, let's face it: all of us have heard of frauds, corruption, incompetence, whatever - for A/B/C/D, the whole lot.
Otoh, C is the only system which ever fostered a Heuschrecke debate.
Not that I'm a fan of Müntefering (and neither of his party), but as they say, if it looks, swims and quacks like a duck...
Last but not least, let's not forget that all the major industrial developments took place well before C has been around.
And if we take for instance the boating industry (just to go back on topic for a moment!), I struggle to think of anything that C ever brought to the table in general - let alone in terms of honesty! :ambivalence:

Two points on us ‘Category C’ inmates if I may:

1. There’s always a danger of labelling an item and assuming it will henceforth share the same characteristics as every so-labelled item. When I think of alternative funds, I think of quant, distressed, macro, long-short, FICC, small cap, large cap, merger arb, special sits and on it goes. There is equal diversity amongst the characters before we even get to PE and others.

jfm’s Category C is a sort of multi-constituency index and while it’s reasonable to consider an index as a whole, one must also consider whether problems therein are better solved by kicking out the bad guys, as opposed to tossing the whole damn thing out the window.


2. Back to that leverage malarkey. Say I fancied a short in the US 10Yr, I’d have to think of the was to think about the negative carry, right? And that’s a function of where the Fed sets interest rates, etc. In the same way if I fancied a punt on, I dunno, Unilever, I might buy the stock, but I might add an option overlay depending on the implied volatility, or I might even trade the volatility in isolation. And the central bank set/influenced risk-free rate would pop up somewhere in the valuation of each of those assets. Efficient market theory goes that millions of little ants like me will help deepen markets, improve liquidity and improve the price discovery process. Efficient market theory doesn’t work well, but you know what I mean.

Now let’s imagine that I’m thinking of buying a riskier enterprise at a time Draghi et al have crushed credit spreads right down to BBB and below. ECB policies such as credit easing, OMT, and its expanded APP programme which include corporate bonds, asset backed securities and covered bonds are explicitly designed to alter that free-market price discovery process for the purposes of fulfilling their monetary and often political aims. The Bundesverfassungsgericht has raised more than an eyebrow at this.

So, a little market ant likes me spots this glaring central bank induced inefficiency in credit markets and I alter the way I do business; exactly what the ECB wants. Meanwhile the Italian regulator is telling banks to de-lever, so I try to buy some of their risky loans and those same banks say to their regulator, “OMG, do you really want us to sell debt to these guys!”

Now imagine a Martian were to land his flying saucer on earth and spot that US corporates which typically pay out c.75% of profits, have begun to pay out c.115% (divs, buy backs, capital dists., etc.). He might wonder why until he realised that this is exactly what the Fed wanted them to do. Returning to Unilever, Berkshire/3G roll up to try and buy it (with ahem cheap leverage) and part of Polman’s defence is that he will …you know what’s coming …lever up his balance sheet with cheap credit and return cash to shareholders (‘increase balance sheet efficiency’ is indeed the lingo).

And that’s not to mention the 86% of UK car purchases funded with PCPs (credit), or overheated real-estate markets where 25-34 year olds have a record-low ownership of houses and those that do are dripping in debt. And did I mention that as part of the UK Treasury/BoE H2B scheme UK builders were invited to tea and biccies where the BoE told them that money WOULD be available in pretty much all circumstances. The problem of cajoling worried UK builders was easy to solve ….Go East …to Malaysia, Indonesia, Hong Kong and China, where long-term GBP swaps could be arranged for HNW Asian “””investors””” to purchase London apartments off plan for 8% deposit or less.

And when it all goes tits, should we seriously blame the Category-C sh1ts? Cos that would free reckless get-elected-at-any-cost policymakers to do it all again :ambivalence:

But since I largely agree with your sentiments and you mentioned Müntefering; here’s how his old boss Helmut Schmidt described bankers (ask if you want the German original):

“I divide humanity into three categories of people. The first category is comprised of normal people. When we were boys we most likely swiped an apple or two, but we later became respectable fellows. Normal people - that's about 98 percent. The second category would be those with a criminal bent. They belong before a court of law, and if found guilty, should be sent to prison. The third category are the investment bankers.

“The term investment banker is nothing more than a synonym for the type of financial manager who dragged all of us - practically the entire world - into the shit and now is in the process of repeating exactly what he was doing up to 2007.”
​

 

[JumbleDuck]

Re: Bavaria in administration

But no worries: I'm happy not to post any more on the topic

Please don't refrain! There is no reason why usually-Scuttlebutt and usually-MoBo forumites can't all contribute to a discussion of mutual interest, but it's inevitably going to waver around topic and po-faced grumbling about that from either side is unhelpful.

 

[dom]

Re: Bavaria in administration

Finally, I used the word "honest" contextually - "keep honest" isn't quite the same thing in EN slang as the opposite of dishonest. What I meant was just to create pressure from peers/comparables to perform well and not get slack.

+1 and that is an absolutely true statement. Hedgies for example often get involved in a company after a long period of underperformance, where the management simply does not have a viable way forward, or worse, is implementing accountancy tricks such as categorising short-term debt as working capital, maintaining impaired goodwill at cost, massaging margins, unsustainable divident policies, failing to engage with a changing market-place/disruptor, etc. I'll bet my list of astonishing auditing mistakes will challenge MapisM's

Yet most managements and their advisors are adept at flinging up clouds of MBA mumbo jumbo designed to suck investors along as long as they can. As you imply in the PE space, a hedge fund or other so-called predator can sometimes (not always) save a company, and in the process save many jobs, by forcing necessary change. Sometimes they only own 10-20% of the stock and rarely do any better than every other shareholder of the company.

Either way, if we accidentally wreck an investment or make a mistake we lose our own money, wreck our reputation, and our clients kick us up the backside.