Ian Carroll Unleashed 2 | Urban Air Gets Darker And Trump Turns On Israel | Candace Ep 185
Episode Stats
Words per Minute
170.76048
Summary
Candace breaks down what private equity has been up to in recent years, and how they have been wrecking companies. She explains how they do it, and why you should be worried about what they are up to. Candace also takes a deep dive into the story we started yesterday about Unilever Brands, Michael Browning Jr., and The Little Jim.
Transcript
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When your famous grainy mustard potato salad isn't so famous without the grainy mustard.
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When the barbecue's lit, but there's nothing to grill.
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When the in-laws decide that, actually, they will stay for dinner.
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Instacart has all your groceries covered this summer.
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Plus, enjoy $0 delivery fees on your first three orders.
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Well, there's a new immigration scandal today, and this time it is white people trying to come to America.
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All that while Trump is seemingly reversing the status quo policy on Israel
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and simultaneously making deals with Saudi Arabia for hundreds of billions of dollars.
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And we'll get to that right after we drop a big bombshell on the story we started yesterday
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about Unleashed Brands, Michael Browning Jr., and the Little Jim.
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Today we're going to start with a brief reminder of what happened to Toys R Us,
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famously bankrupted by the private equity firm KKR and Bain Capital.
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Because it's important to highlight just how much private equity will do for profit
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and how little they care about who they hurt while they do it.
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Before private equity bought them out, Toys R Us had $1.8 billion of debt.
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After private equity was done with them, they were loaded with more than $5 billion of debt.
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By 2007, interest expenses consumed 97% of their profit.
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Amazon was a juggernaut that spelled the demise of traditional retail stores.
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And in 2017, roughly 7,000 stores and 50,000 jobs evaporated.
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Between 2015 and 2017, of the 43 large retailers and supermarket companies that filed for bankruptcy,
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more than 40% were owned by private equity firms.
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But what's worse, private equity has started to master the art of the leveraged buyout,
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where they don't actually put up the money to buy a business,
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but instead just take out a loan using the business they are about to buy,
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but don't yet own, and they use that as a collateral to secure that loan.
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Many private equity firms ship in only about 1-2% of the equity needed for a leveraged buyout
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and skim fees and interest throughout the deal.
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If things go well, the firms take a huge cut of the profit when they exit.
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If everything blows up, they usually still escape with nary a burn.
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Another common tactic used to gut a company is once you control it,
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you sell off all the real estate to your real estate buddies,
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and then force the company, Toys R Us, to lease back its own properties for monthly rent,
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The private equity model, often called vulture capitalism,
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is to loot and flip, not to invest or run companies well.
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And many people don't realize just how many beloved brands
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have been bought out through these types of leveraged buyouts.
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This is just a small smattering of recent leveraged buyouts,
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mostly by private equity, but sometimes by public megacorporations as well,
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that forming cozy relationships with big consulting firms
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is a great way to simultaneously mismanage a company
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The consulting industry is ruled by the big three.
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That would be McKinsey, BCG, and Bain & Company.
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Some of the big private equity firms even have associated consulting firms,
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which are obviously totally separate companies,
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they would never collude or do anything below board.
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This is actually exactly what was happening to GameStop,
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leading into the 2021 short squeeze that rocked the world.
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and they had hired BCG to consult them on the way down.
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prioritization of excessive fees over clients' interests.
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who bought his way into GameStop right before the 2021 squeeze,
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and he kicked out the corrupt board members and fired BCG.
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talking s**t, literally, about BCG and this practice.
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The exact same playbook happened at Bed Bath & Beyond recently,
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and forcing them to lease back their own buildings
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I mention all of that just to show that this is a pattern
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that will do just about anything to grow their wallets.
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You know, this guy who owns the Trampoline Park Company
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where yesterday we saw videos of kids falling off of rides
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and his life's work was Leap of Faith Adventures.
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The name of our company is Leap of Faith Adventures,
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which blah, blah, blah, blah, blah, blah, blah.