retail news in context, analysis with attitude

There was a fascinating piece in the New York Times over the weekend about the private equity business, and specifically how two equity groups turned Twinkies into big profits.

Here's how the Times framed the story:

"Across the nation in the summer of 2013, there was a feeding frenzy for Twinkies. The iconic snack cake returned to shelves just months after Hostess had shuttered its bakeries and laid off thousands of workers ... Nowhere was it sweeter, perhaps, than at the investment firms Apollo Global Management and Metropoulos & Company, which spent $186 million in cash to buy some of Hostess’s snack cake bakeries and brands in early 2013.

"Less than four years later, they sold the company in a deal that valued Hostess at $2.3 billion. Apollo and Metropoulos have now reaped a return totaling 13 times their original cash investment.

"Behind the financial maneuvering at Hostess, an investigation by The New York Times found a blueprint for how private equity executives like those at Apollo have amassed some of the greatest fortunes of the modern era."

You can read the entire story here.
KC's View:
The Twinkie is a great example to use in this case study because it is such a basic, relatable product. I just found this fascinating - it is about money and power and jobs and risk and reward. And about money. (Did I mention money?)

I have to admit that I read this as if trying to decipher hieroglyphics. This world is so far from my experience that I just found it fascinating ... even though I have to admit to a certain amount of cynicism about it.

Me, I must confess that I subscribe to what Raymond Chandler wrote in "The Long Goodbye:"

"There ain't no clean way to make a hundred million bucks.... Somewhere along the line guys got pushed to the wall, nice little businesses got the ground cut out from under them... Decent people lost their jobs.... Big money is big power and big power gets used wrong. It's the system.”