Comments on: Annals of private equity, Tamara Mellon edition

By: ARJTurgot2

ARJTurgot2 — Thu, 16 Feb 2012 12:13:49 +0000

She thought she was clever and connected. So did most of the people with Madoff.

By: LiamAuer

LiamAuer — Tue, 14 Feb 2012 02:11:18 +0000

Private equity does have a function in the economy. Whether their fees are justified and their indefensible tax break are other questions, however.

Still, you know what private equity is going to do. She clearly didn’t need to exit for wealth reasons and she wanted to retain control. Why sell to PE, then? She, or her advisors, should have known better.

By: boson

boson — Mon, 13 Feb 2012 22:28:17 +0000

Tamara is totally correct. Private equity is a cartel that has a stranglehold on the flow of capital to entrepreneurs. Banks don’t make loans to companies any more — they either do debt deals or lend money to Private Equity — and the PE guys don’t do minority investments, period. That’s the only option she had. The IRR for PE over the last decade is ~7%, roughly the going rate on the PIK coupon/vig on their Convertible Preferred, so PE has the cushion of wiping out all the founders’ junior equity in the process. They do not create value; they extract it. Just like oil, gas and locusts.

By: adaytoday

adaytoday — Mon, 13 Feb 2012 17:48:19 +0000

http://www.efinancialnews.com/story/2012 -02-09/tamara-mellon-jimmy-choo-fashion- private-equity-sale-lion-capital-labelux -carlyle?mod=mostread-home

By: wmaustin5

wmaustin5 — Mon, 13 Feb 2012 17:43:43 +0000

Um, Ms Mellon’s gripe looks much more like sour grapes than legitimate complaint. Let’s not forget that Jimmy Choo ceased to be “hers” when she sold a majority interest back in 2001.

Looks like she’s pissed b/c she thought she won the power when she forced out the founder. Now, with the sale, she is realizing that she never had it in the first place.

You play with the big boys sometimes things don’t work out the way you planned.

By: EpicureanDeal

EpicureanDeal — Mon, 13 Feb 2012 15:05:26 +0000

Cheeky.

If Ms Mellon was so concerned for the long-term direction of her company, perhaps she should have asked hubby to provide capital, or found passive minority investors, instead of taking a *control* investment by private equity.

For the avoidance of doubt, ladies and gentlemen, know this: when you sell voting control of your company to private equity in exchange for their money, you *have sold control*. They make the decisions, and they can outvote you–and even fire you–if you disagree. That’s why they’re willing to give you so much cash up front. It is no longer “your” company. You sold it. Deal with it.