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Guy Hands, founder and chairman of private equity firm Terra Firma, spoke rather candidly on the missteps he and his firm made in its management of EMI in a video interview posted today on Bloomberg (below). Terra Firma purchased the music company for some $6.3 billion in May 2007 at the height of the credit market and three-and-a-half years later Citigroup took back possession of the label in what amounted to a foreclosure deal. <\/p>\n
While Hands, seen here drinking a pint with Bloomberg\u2019s Cristina Alesci and looking infinitely more relaxed than he did a few years ago, freely admits his firm\u2019s failing he first trumpets his firm\u2019s management of EMI. \u201cOur ability to come up with strategy actually was pretty good,\u201d he says, \u201cthe music industry today pretty well does what we did with EMI.\u201d\u00a0 Hands goes on to say that EMI\u2019s market share between when they bought EMI and Citigroup sold it \u201cwent from 9% to 17%\u00a0 — that\u2019s an extraordinary movement in a declining market when you default, so the strategy worked.\u201d\u00a0 Hands expresses regret at having to layoff more than 50% of the label\u2019s workforce, that it would seem that was party of the strategy he heralds.<\/p>\n
What Hands admits what Terra Firma got \u201ccompletely wrong\u201d was their \u201cability to predict what would happen in the financial markets.\u201d He then goes into a litany of lessons learned, including the importance of taking a 10-year view of a transaction, not getting rattled by large debts and the benefits of having a diversified portfolio all of which he summarizes by saying, \u201cWe\u2019ve learned some very expensive lessons, we\u2019ve been through a pretty severe whipping but we\u2019ve come out the other side and we increased the value of our equity last year by almost double what we lost on EMI.\u201d<\/p>\n
Source: The Hollywood Reporter<\/p>\n","protected":false},"excerpt":{"rendered":"
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