Walt Disney acquires Marvel

[fpb]

I don't know whether to be happy or not. On the one hand, given Disney's current habits, this will do nothing to slow down Marvel's descent into unmitigated sleaze. (Find out how many Marvel characters are now said to have incestuous relationships, you'll be surprised.) On the other hand, it probably represents the final end to the old and bad tradition of Marvel being the cash cow for financial adventurers using it for their own purposes. (Two words: Ron Perelman. I think that using the company you are buying as collateral to have the money to buy it, and thus load it with debt the moment you bought it, ought to pass from the number of sharp financial practices into the register of criminal frauds.) Whatever else may be said about Disney, it is at least an entertainment company, and to that extent its goals are the same as Marvel.

Comments

[stigandnasty919.livejournal.com]

The reason why I would regard this as bad practice by the bank is that a loan secured on the property being bought, with the debt being transferred to the company being bought, is inherently risky. It reduces the value of the company dramatically and makes the liklehood of failure that much more likely. Risks are bourne solely by the company being bought and the bank. Perelman managed to buy a company whre he carried none of the risk. Why would any banker agree to that?

Should the Bank have to realise the security, it is very unlikely that they would have fully recovered their loan. They almost never do. In effect they are speculating on what they see to be a rising market.

That type of speculation is the very thing which brought about the current crisis. In the case of Marvel the Bank did ok, becasue the business was able to work its way out of the difficulties, in many other cases that would not be true and many companies in the same position have and will continue to collapse.

The banks lent money to buy an asset, and in doing so dramatically reduced the value of that asset - a highly risky strategy. Old boring bankers would not have done this type of deal. There is also very good argument for regarding it as being at the very least unethical

[fpb.livejournal.com]

Oh, I agree. My idea of good business is one where all the parties to a deal have a final advantage. In this case, the bank and Perelman had the advantage, and Marvel suffered for years. In fact, it may well be that the great comics revival of the eighties was muffled because Marvel was forced by circumstances to go all out for immediate profit, instead of working out a long-term strategy to build up the market; although in general the American comics industry has NEVER had management capable of thinking strategically. In a sense, it and Perelman deserved each other.