Turnaround

Bright eyes...every now and then...

Yeah, it was a song from the '80s. Just go with it.

Your business sucked. No growth. No profits. Then you brought in Mike Messiah. He changed things. Fired everyone, more or less, including you. And he turned it around. Like the beat. The company went from $80 million in losses to $325 million in earnings, and the stock went from $8 to $100.

Thanks, Mike. We're happy you fired us idiots. Or is it "we" idiots?

See: Turnaround Strategies.

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Finance: What is MBO v LBO?17 Views

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Finance allah shmoop What is an m b o versus

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and lbo Okay let's Get their letters right first And

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n b o is a management buyout Ngos on their

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own aren't all that common But in a given company

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inside management might own same thirty percent of the stock

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They might partner with another investor who owns a twenty

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percent or more And then they might borrow say fifty

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percent in debt and take the company private fixit pivot

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tweak live with bad quarters for a while without wall

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street yelling at him And then they might sell the

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company cell or whatever Maybe take it public again will

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The distinctive feature here is that the company is already

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in place Management is doing the deal and more often

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than not essentially all the net worth of the management

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will be in the company leveraged when the embryo is

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completed And that level of financial commitment really keeps the

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team focused Because if things don't work out when they

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lose everything your house their car in there Slinky collection

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All right next up we have an lbo which is

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a leveraged buyout and it just refers to the practice

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Of taking on debt to buy a company sometimes with

01:13

same management sometimes with different players like an lbo is

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a bigger venn diagram set than the embryo thing Well

01:20

in an lbo the same basic thing happens But in

01:23

a whole bunch of cases management is tossed out The

01:26

company wouldn't be quote vulnerable unquote to an lbo Had

01:30

management done a good job and kept the company trading

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or valued at a high multiple where it would then

01:36

be almost impossible to make the risk reward scenario workout

01:39

in taking out a whole lot of debt to get

01:41

company bought and then turned in the right direction Instead

01:44

new management in lbo is usually brought in and resembling

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moses noah and other biblical characters and their perceived greatness

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and there's a stone tablet with a new set of

01:53

commandments Thou shalt be profitable or something like that Arguments

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are had at the board level and eventually either the

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lbo works and the company has taken public again or

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sold for a big price Or it isn't and wrath 00:02:06.63 --> [endTime] has had

Find other enlightening terms in Shmoop Finance Genius Bar(f)