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It's weird how many times I've seen this rough story - business starts, runs fine for years, gets bought by some large conglomerate, gets shuttered as unprofitable, gets re-bought by the employees, and runs fine again. One begins to wonder if there's maybe something gone awry in the modern model of business.

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There may be a correlation but you can make the argument that the cause runs the other way. You imply that the acquisition causes the failure - but another read would be that failing businesses are put up for sale (insiders see the failure first) and the acquirer is left with the shutdown.

The idea of an employee buyback leading to success (we'll see!) would, of course, lend credence to your causal theory.

On top of that, employees are more likely to be in denial and will chase the sunk cost for years.

This is a very good point, there are multiple ways to look at this. One of the bigger (and harder) questions to answer in the run-up to a DD is whether or not the reason for the seller to sell is the stated one.

tho you talk about it like an alien event / debate contest, mismanaged takeovers that end the company are common enough, incl from japan acquisitions and in that industry

A large conglomerate will have to show a return on their investment, a bunch of people owning their place of employment get their salaries and are happy, even if the business runs close to 0.

but the customers still get their beer and the workers still earn a living. sounds like dead weight was cut.

Yes, that's one way of looking at it. But the business will have a harder time to weather bad things happening that would require a larger capital investment.

Plenty of businesses should just stay small. This fascination with scale and growth is super unhealthy. But continuing a business that already exists is easier than starting one from scratch and building up reserves just in case something that you really need for your primary process breaks takes time. So time will tell whether it really was dead weight.

> have a harder time to weather bad things happening that would require a larger capital investment.

The opposite. Co-ops are more resilient to downturns

What’s wrong with infinite growth? The only people that tell you it is unsustainable are those 8th grade math nerds.

I agree with you, it seems like we are living in an era with global growth accelerators but no one to tell people it is impossible to keep increasing profits forever regardless of how many markets you can be a leader for.

how can there be infinite growth with limited resources?

maybe i'm one of those 8th grade math nerds.

Disruption, synergy, blue ocean thinking, vertical integration, blockchain, leveraged buyouts, stock buybacks, tax advantages, bunkers

a lot of limitedness currently is artificially generated. such as restaurants/groceries/farmers constantly binning unimaginable amounts of food

A large amount is finite. Less of a large amount is also finite but does not make the initial large amount infinite retroactively.

"Everything changes but nothing is lost."

There are unlimited resources.

vast quantities of bullshit

Growth is not a measure of physical resource consumption, it’s a measure of the value of goods and services produced. If you can find a way to make something more valuable out of less raw materials, you can increase growth while decreasing consumption. One example is that computer chips that do the same computation with less silicon and energy are worth more. There might be a limit to this, but it’s not obvious. A bunch of countries already managed to increase economic growth while decreasing CO2 emissions. Maybe in 100 years humanity’s main preoccupation will be competing to tell each other more fashionable jokes while recycling the same physical materials, with economic growth continuing uninterrupted all the while.

I don't see how your logic works with a brewery. Would it be a good thing a brewery makes exclusive rare beer that costs infinite dollars a bottle? Or sell an infinitely small drop of beer?

If people could afford that, it's not the beer creating the value.

Value depends on another system and it is relative. So value of something can go up while the world is burning. I think that's what is meant by infinite growth doesn't work. It could work for something, but not everything always.

Economic growth is not purely extractive of natural resources. If a new invention of better performing clippers allows me to cut twice the hair as a barber, I've doubled my economic value without any change in resources.

Human ingenuity has not yet found its bound.

A handful of sand on the beach becomes silicon transistors becomes AI models becomes miracle drug.

Your kind of thought process will seem amusing and quaint in the future and I don’t think it’s just 8th grade math nerd thinking. The math says we have existed in a very unique century historically with regard to economic growth.

https://www.cold-takes.com/this-cant-go-on/

Even maintaining current economic growth would mean a 10x by 2100, which is absurd in a world expected to stop population growth by then.

https://www.pewresearch.org/short-reads/2019/06/17/worlds-po...

Me to. Agreed.

The bigger the company the further away from the employees and customers the leadership gets, and therefore the less guilty they feel about squeezing every penny out of them.

There is a great book, small giants, about companies that choose to go against this trend and be great instead of large.

Anchor Brewing is one of the companies mentioned in the book

No way! I had forgotten!!

  It's weird how many times I've seen this rough story

That's not at all what the story was. Anchor has been in rough financial shape for a while. That's why Sapporo bought them. Anchor almost went under in '65 and in '10, and in '17.

I suspect the strategy is to downgrade the product on the sly and then run down the brand. There is money to be extracted when people are still paying for quality they do not receive. Endgame: bankruptcy. Middle game: PROFIT!

All the "local employee-owned" marketing may make locals more inclined to buy inferior overpriced product as opposed to another brand owned by foreign corp.

What are some examples of employee purchased businesses?

Publix and Arthur Flour are the two that come to mind immediately but IIRC several regional grocers went that way in the 90s and oughts. Hostess almost did before the Bimbo offer came through. Not sure if there's something about foods that makes it work better there.

Speaking of failed San Francisco institutions. Hostess bought Parisian bakery shortly before going under. In terms of "legacy" sourdough bakeries I think we're down to Boudin and Bordenave at this point.

Edit: I should probably point out that was around when low carb diets started gaining popularity. Not a great time to be any sort of bakery really.

Astor Wines and Spirits in NYC is a great example on a somewhat smaller scale. Founding family sold the business to the employees (about 75 of them) under an Employee Stock Ownership Plan.

Replogle Globes followed this exact trajectory. Four employees bought the company when the conglomerate was planning to liquidate the company.

This pulp mill in BC, Canada was purchased by a mix of employees and other investors in 2008. I'm not sure the initial mix, but the website says 25% employee owned currently:

- http://www.harmacpacific.com/employees.php

- https://forestryfriendly.ca/harmac-pacific-pulp-mill-local-s...

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