[byronic]

Not referencing the Saudi Arabia portion here specifically but LBOs as documented in the book Barbarians at the Gate (covers Nabisco/RJR tobacco) gives me basically zero hope for the future of EA. EA was already rabid cost-cutters and RIF specialists, and they won the most hated company award for however many consecutive years for a reason. Giving them crushing debt to go along with their propensity to give large executive bonuses and stomp their workforce is not a good recipe long-term

[ARandumGuy]

Are there any examples where a company was purchased via a leveraged buyout and the company went on to be more profitable afterwards? Because the only examples I know of resulted in the purchased company going bankrupt fairly quickly.

[nashashmi]

Gibson Greeting Cards (1982) by Wesray Capital, Bought for $80M (only $1M in equity), sold for $220M within 18 months

Hilton Hotels (2007) by Blackstone Group, Despite the 2008 crisis, refinanced and sold with a $14B profit

Safeway (1986) by Kohlberg Kravis Roberts, Restructured, sold underperforming stores, returned to profitability

HCA Healthcare (2006) by KKR & Bain Capital, Strong cash flow supported debt; remained stable and profitable

Dell Technologies (2013), Silver Lake Partners, Went private, streamlined operations, and rebounded strongly

RJR Nabisco (1989) by Kohlberg Kravis Roberts Iconic LBO; despite controversy, generated $53M profit

[stogot]

So 50/50 odds on completely destroying the company (and jobs) or generating some minor wealth for a handful of investors?

[Invictus0]

Try to think clearly for a second. Why would there be a trillion dollar PE ecosystem if this always completely destroyed the company?

[outside2344]

The PE firms strip the assets, aka have them take on huge amounts of debt, sell assets, and then pay them dividends etc. before they collapse.

[NickM]

Why would banks keep giving PE firms loans for these kinds of deals if the companies inevitably collapse and default on those loans?

Not trying to defend PE here, but this narrative doesn't make sense to me.

[mlinhares]

Because the goal is short term profit, not long term business success. It makes absolutely no difference if the company survives the process or not, what matters is that the PE firms extract their money from the process.

[Invictus0]

I think if you actually reflect on the matter you would realize that PE firms need to be able to sell the business in order to make money, and that they do in fact sell the business for a profit in the majority of cases. The extremely rare cases of yore where you could buy a business for less than the value of its assets and simply sell off the assets and leave the carcass for bankruptcy are long gone.

[consumer451]

What pressures are there on PE firms do things with more long term "good for the USA" type of thinking?

[stogot]

Since when is 50/50 an odds of “completely”? Think clearly for a second

[nashashmi]

Imagine if PE took over Circuit City

[balderdash]

leverage increases the disparity of returns (so some companies are definitely out of business because the of the leverage put on them) but by far the vast majority of LBO’s are at least moderately successful.

This give you some idea of the volume https://www.ropesgray.com/en/insights/alerts/2025/07/us-pe-m...

[deanc]

Many sports teams come to mind. Pretty much any F1 team that exists is now worth a lot more on paper than it was purchased for. A few EPL teams come to mind too.

[tanjtanjtanj]

Those are just buyouts not leveraged buyouts.

No EPL team was purchased with an LBO as far as I know.

[nereye]

[1] “ The Glazer family’s acquisition of Manchester United remains controversial to this day.

Their £790m takeover in the summer of 2005 came by way of a leveraged buyout: when a significant amount of borrowed money is used to fund the acquisition of a company, with the debt secured against that company itself.”

1 - https://www.independent.co.uk/sport/football/manchester-unit...

[choilive]

Dell did pretty well after going private

[ReptileMan]

But its buyout was lead by Michael Dell.

[recursive]

Why "but"?

[pchristensen]

Having the original founder leading the buyout is not typical. The Dell situation was much more like Steve Jobs returning to Apple than a typical LBO.

[watwut]

Because the person buying it was interested in the long term health of the company.

Most of leveraged buyouts is all about putting debt on the company, selling what you sell and milking it while starving it.

[jonas21]

Heinz, Hilton, Dell.

[missedthecue]

Hilton's LBO essentially have saved the brand.

Twitter is yet an unfolding story but it seems to be working.

[cmdli]

Twitter isn’t collapsing, but it’s hardly more profitable. In fact, the last numbers we know about them show >50% drop in revenue.

[missedthecue]

I don't think you're right. During its last fiscal year on the stock market, Twitter reported a net loss of $221 million.

We don't have exact insights to X.com's books, but we have credible reports from the Financial Times that they produced over a billion dollars in ebitda in 2024. This is completely possible with a 50% revenue drop. They laid off 80% of the company, something like 6,000 people.

[cmdli]

The reports I have seen have shown significant decreases in revenue, from around $5B in 2021 to $2.5B in 2024: https://www.businessofapps.com/data/twitter-statistics/

I’m not sure about profit, but I do know that Twitter made $1.4B in profit in 2019 according to their SEC filings.

[fair_enough]

I follow Charlie Munger's advice and substitute the phrase "bullshit earnings" anywhere I see mention of EBITDA.

If the GAAP income is negative, the company lost money last year. End of story.

[nemo]

Right now Twitter is steadily shedding users and watching ad revenue steadily drop. Looks like it's in a slow death spiral to me.

[missedthecue]

Twitter produced $1.2B in ebitda in 2024 according to the Financial Times. Are you sure you're not mentally operating on 2022 data?

[churchill]

>ebitda

Beautiful turnaround if those figures are reliable, but like Munger calls them, EBITDA tends to bullshit metrics derived by cobbling up bullshit to hide that a company is losing cash.

Just like Figma booking $700M in 2023 profits which was only possible because of the $1b Adobe breakup fee. Proceeded to lose $732m on $749m in revenues the very next year.

[Ekaros]

I wonder how well they are doing on that "I" there...

[rwmj]

Was Twitter an LBO? I thought the funding came from Musk taking on the debt.

[detaro]

A big part of why Twitter needed to cut expenses drastically after the buyout was that it suddenly had an extra >1$ billion of yearly debt repayments to handle.

[watwut]

Did not helped they alienated paying customers (as in companies selling ads) at around the day 2 by literally ignoring them and not providing the service.

[ARandumGuy]

IIRC Musk wanted to get an LBO, but wasn't able to find anyone willing to loan the money.

Keep in mind that a LBO is actually a good deal for the bank, because if the purchased company goes bankrupt, the bank can recoup their investment by liquidating the company.

However, that only works if there are assets to liquidate. This can include physical assets, valuable IPs, or favorable lease agreements. In other words, anything that someone else would want to purchase.

Twitter, being a website, doesn't have a whole lot of assets they could sell. Which meant that other collateral was required for Musk to secure financing.

[overfeed]

> However, that only works if there are assets to liquidate

Ownership of the company itself can be sold, but this only works if there's someone who believes the company was overvalued. Unfortunately for Musk, Twitter's market cap dropped by tens of billions between the time he locked-in his offer and the deal's effective date. It's hard to find banks to fund your LBO when you're paying significantly more than what the market believes the company is worth.

[kchoudhu]

It's still a leveraged buyout.

[rwmj]

But wouldn't a "true" LBO be where the acquired company takes on the debt?

[inerte]

And Musk didn't act alone, I am not sure how much others contributed, but there were other people/companies involved.

[estimator7292]

It would be fantastic if EA went away. They've been such a blight on the entire industry, killed off or destroyed so many good franchises, developers, and studios.

[mnky9800n]

Did you see the HBO movie version of Barbarians at the Gate? I thought it was pretty interesting. You can watch it all on youtube.

https://www.youtube.com/watch?v=ZS4ENJCIYNM

[deepfriedbits]

Loved the movie (and the book). The movie is highly entertaining for a business movie.

[mrcwinn]

This is a fantastic movie that was lost to time!

[vkou]

Does EA 202X stomp their workforce? I had a vague idea that this was largely a thing of the past.

The wiki article linked cites a lot of abuse, but all of it is nearly 2 decades old. My understanding was that it course corrected, and is one of the better gaming firms to work for ATM.

[byronic]

Jason Schreier (sp?) is probably the journalist with the best track record on covering EA and it’s generally been rotten all the way down. His recent book Play Nice focuses on just Blizzard but I wouldn’t be surprised if he does one on EA someday because they are in a league of their own when it comes to toxic workplace practices

[vkou]

From a cursory search, he dunks on mismanagement in EA fairly regularly, but I'm not finding a lot of evidence of him reporting on worker abuse. (Layoffs in a failing sub-studio are shitty, but aren't that. Vision whiplash is shitty, but is also not that. Management mandates to implement features that you know will tank your game are shitty, but are also not that.)

Maybe it's pay walled.

Do you have a source?

[byronic]

I'll defer to people who claim to work there now (avanderveen in the other replies). If you want my perspective, your parenthetical is describing worker abuse. Severance-avoidant layoffs and crunch are shitty and _are_ worker abuse -- in my opinion.

[avanderveen]

In my experience at Maxis (2021-2024), EA 202X was quite a nice place to work

[Tiktaalik]

I do not have first hand experience, but my impression from being in the industry is that modern EA is not at all like the "EA spouse" era.

[Yizahi]

You had any hope for them?

[qn9n]

I was hoping the launch of early access skate. would be received poorly, it was due to the beloved franchise being made into a Fortnite-like money grabbing scheme, would cause them to run backwards and fix it releasing an actual skate series game with some live service features but a solid focus on the original franchise. However that hope is dwindling.

[ecshafer]

EA won the most hated company award because video game players are dramatic. Charging $5 for a launch DLC is a drop in the bucket compared to the ways that some larger more critical companies can affect your life.

[vunderba]

EA has been a target of scorn for a while because of a laundry list of issues (including pay-to-win schemes, loot boxes, treatment of employees, etc.) which is long enough to warrant its own dedicated wikipedia page.

https://en.wikipedia.org/wiki/Criticism_of_Electronic_Arts

[ecshafer]

EA doing any amount of shenanigans isn't making people sick, killing people, making people homeless or destitute. Their crimes are minor and petty.

[ummonk]

Addictive gambling for kids is hardly minor and petty. Many children have spent thousands on EA Sports games.

[lupusreal]

TBQH Valve/Steam is a major factor in this gambling in games scene but gamers love them. So I don't think this is the real reason gamers have a problem with EA.

[overfeed]

Which Valve game involves a pay-to-win mechanic that affects gameplay?

[Ekaros]

My defence with Valve is that at least on their stuff you most of time get stored credit. With the rest it is same, but it is actually drown the drain.

[LunaSea]

So I guess that no other matter can receive attention if some people are homeless in the world?

[msl]

Not so, but if you're to pick one company over all the others as being the most deserving of your ire, EA seems like a rather strange choice compared to, say, Nestlé [1], Chiquita [2], The Coca-Cola Company [3] or Shell [4]. One might even wonder if there isn't something wrong with your priorities.

[1] https://en.wikipedia.org/wiki/Controversies_of_Nestl%C3%A9

[2] https://en.wikipedia.org/wiki/Chiquita#Criticism

[3] https://en.wikipedia.org/wiki/Criticism_of_Coca-Cola

[4] https://en.wikipedia.org/wiki/Shell_plc#Controversies

[throaway5445454]

Well that's all well and good, but the ignorant masses who called EA the most evil company did so for basically the same reasons that you'd critique those other companies. Big corporations that put out productions designed to do nothing but take money from (often poor) people at the expense of their health.

To me, the constant criticism of gamers over the issue reads like shilling for that pathetic open letter EA put out in response. Classic deflection from a toxic entity.

[rightbyte]

So EA also does not help starving children.

[stackskipton]

Sure, their “crimes” are minor compared to RealPage raising rents on everyone but it wasn’t because gamers were dramatic. It was most hated because it was so in your face.

[lofaszvanitt]

Nah, EA's history is laden with terrible decisions, killing creative teams, neglecting good project's marketing and killing them in the process because they had another internal game in the same genre and the like. It's a fucking cesspit of a company.

And they sit on a lot of good franchises and they literally do nothing with them.

[lupusreal]

Gamers will forgive anything if the games are good. But EA is nothing but a slop factory.