Not a mystery: Private equity firm bought them out with borrowed money, raided their resources to enrich themselves, then left Remington to rot. It is a common story now. The private equity firm makes a bunch of money and people are jobless.
"I wonder how many times we're going to keep seeing news media post these sorts of news stories as a 'woah, a tornado hit this landmark' without including one single line about 'the landmark was put in the care of a tornado factory a few years back and never saw another repair'"
In what universe is "I borrow a bunch of money, buy a company, then force the company to basically borrow money from me" a value-creating operation? Cuz it sure isn't this one.
It will never happen.
Is one way better than the other?
The other way is absolutely better. The "bang" you hear is the bursting vacuum of PE sucking all the value out of the company, depositing it in their bank account, and leaving others holding the bag, a bag that's now far bigger because the company now has less to no ability to satisfy its obligations.
But the PE firm made billions for (sometimes, less than a year of) "management and consulting fees".
These kind of leveraged buyouts are perilously close to what Tony Soprano does to Ramsey Sports and Outdoors - take a controlling interest (albeit by a different method), utilize the business' credit lines, assets and collateral to bring in a lot of (temporary) value, transfer it out of the company, and leave the smoldering ashes of a company massively bankrupt with bad debts all over town, including many it didn't have before the buyout happened.
Not sure what terminology you would pick for that - "debt bombing" or "reverse Phoenixing"! The end result is that they stripped it. Then if any liability, they could write that debt off against tax liability and or factor off the debt. Failing that - asset write-off equally works well on tax gaming. Then there are the remaining assets (Like the Brand name for example) that they could sell off cheaply to a company they indirectly own that specialises in licensing... It's a vicious circle at every level when it comes to finance in business. Good news or bad news - somebody profits and a few more people pay.
I will confess - I'm still unclear of the legal and accounting practice aspects that allowed the parent company to push down debt like that. But then debt loading is another way of stripping a company. Though does read a bit like Phoenixing, just in variation that appears to skirt the law and respective regulations in finance and companies. Though, how they could push down debt without raising any flags would be a candidate for root cause in this travisty.
In my situation, my employees profited nicely from a PE acquisition. They all got a sizeable transaction bonus. Not only that, they received additional job security with the backing of a large company.
For certain, groups where individuals all act in their own self interest sometimes come up with the best solutions for everyone. It bothers me that people believe either maxim must always be true for all circumstances. (this is effectively socialism vs. libertarianism) It seems very clear to me that each camp has supporting examples, and that there are very few universal maxims.
Getting back to the main point, I think there have been many instances were selfish private equity has made things worse for people, which does not discount instances where it has made things better.
I still don't believe that a founder doing what's best for them and their family is "wrong". Absolutely, employees should be a concern and a founder looking to be acquired should do whatever possible to ensure a successful future for them as well. But to say that a founder must own a company forever and ever with no chance at ever exiting is not something I can agree with.
No hard feelings, but I hope we can both take away here that there are nuances to this topic (and every other topic) and to say that "selfish behavior is wrong" is too extreme a statement.
The universe is a cold, uncaring place. Part of the reason we create societies is to improve on that.
Conversely, without the World you are nothing. You can't survive without the help of others.
If you are an alien learning about humans, you should start with some children's books. I think you're missing some pretty fundamental knowledge here
What I'm hearing you say is that once a founder starts a business and hires a single employee they must operate that company until death. That seems like a ridiculous position to me and perhaps you're missing some fundamental knowledge on life. If that were somehow codified to law, I would've never started a business.
[1] http://www.americanbusinessmag.com/2012/03/selling-your-busi...