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stanleycr1

join:2008-12-02
Ivor, VA

When did Karl first explain this?

I mean anybody in any type of business should at least do a couple of google searches before signing a contract. Karl has been writing stories about this for a long time maybe even before 2008.

ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL
Yes, he has. And I daresay that 90% of the people on this site also understand what a rotten deal this was. We knew it from the beginning, even before the contracts were signed.

But, IMHO, many of these deals aren't driven by people who know the industry; they're driven by accountants, financiers, and just plain greedy fools. These folks think they know how telecom works--with a little help from the sales pitch they doubtless viewed--but they often don't have a clue. They've probably never even heard of BBR, nor do they know about fixed LTE, the state of DSL, or the fact that Verizon is simply unloading less profitable markets that it never bothered to upgrade and can easily reenter through its wireless division. In short, they have money, and they THINK they know telecom. And, since these types of folks often have a very high opinion of themselves, they aren't going to take the advice of a bunch of posters on an Internet forum.

My mom had a saying she told me more times than I can count, and it seems to fit this situation perfectly: A fool and his money are soon parted.

Mr Matt

join:2008-01-29
Eustis, FL
kudos:1
reply to stanleycr1
It is all about salesmanship. I am sure that Verizon had a team of their lawyers make a pitch with charts and spreadsheets and a slick Power Point presentation to Fairpoint, showing how the purchase of Verizon's assets was the deal of the century.


Cheese
Premium
join:2003-10-26
Naples, FL
kudos:1
reply to ISurfTooMuch
said by ISurfTooMuch:

And, since these types of folks often have a very high opinion of themselves, they aren't going to take the advice of a bunch of posters on an Internet forum.

And they need to listen to people on here why?

viperlmw
Premium
join:2005-01-25
said by Cheese:

said by ISurfTooMuch:

And, since these types of folks often have a very high opinion of themselves, they aren't going to take the advice of a bunch of posters on an Internet forum.

And they need to listen to people on here why?

I would think a $2 billion lawsuit explains that.


Cheese
Premium
join:2003-10-26
Naples, FL
kudos:1
said by viperlmw:

said by Cheese:

said by ISurfTooMuch:

And, since these types of folks often have a very high opinion of themselves, they aren't going to take the advice of a bunch of posters on an Internet forum.

And they need to listen to people on here why?

I would think a $2 billion lawsuit explains that.

Um...no

ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL
reply to Cheese
said by Cheese:

said by ISurfTooMuch:

And, since these types of folks often have a very high opinion of themselves, they aren't going to take the advice of a bunch of posters on an Internet forum.

And they need to listen to people on here why?

Well, for one thing, if they'd bothered to listen, maybe they wouldn't have gotten themselves into such a horrible deal. It's been no secret here that Verizon was dumping these more rural areas, and it's been known for years that the copper plant in these areas has essentially been allowed to rot. And not to mention the fact that wireline phone service has been in decline for the last decade or so, and cable has been eating DSL's lunch for about the same time period. None of this is to say that you can't turn things around, but you'd better be ready to hit the ground running with some major upgrades to the network the moment you sign the deal.

If the FairPoint folks had been paying attention, they'd know this.

ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL
reply to Mr Matt
And that's precisely when the FairPoint execs should have stepped back, done their research, and asked the question, "If this network is such a potential moneymaker, why are you wanting to get rid of it?"

Badonkadonk
Premium
join:2000-12-17
Naperville, IL
kudos:5
Reviews:
·Dish Network

1 recommendation

reply to Cheese
said by Cheese:

Um...no

Silly, isn't it? I work on probably a dozen M&A deals a year of all sizes and not once do I ever hit some stupid message board to see what the members are saying. I mean I do to see what people are thinking, but not to listen to their advice. That would be silly. The amount of clueless IP jabbering that I see on here is pretty indicative of the general cluelessness likely in all aspects of a deal. The knowledgeable voices are always drowned out by the agitators and the know-it-alls.

And I don't go for the fact that the sophisticated NY attorneys threw the wool over FP's attorneys. That about as stupid a comment as I've read regarding this as well. Inside counsel rarely does these deals. Mostly it's handled by outside firms that do M&A as their bread and butter.

It simply sounds like either bad due diligence (which I doubt) or someone higher up wanted the deal bad enough.
--
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FFH
Premium
join:2002-03-03
Tavistock NJ
kudos:5
reply to ISurfTooMuch
said by ISurfTooMuch:

And that's precisely when the FairPoint execs should have stepped back, done their research, and asked the question, "If this network is such a potential moneymaker, why are you wanting to get rid of it?"

And even if Fairpoint still wanted to expand knowing what you just said, they paid WAY TOO MUCH for the assets. They should have told Verizon to cut the price or go pound sand.
--
»www.politico.com/rss/2012-election.xml
»www.politico.com/rss/2012-election-blog.xml



Cheese
Premium
join:2003-10-26
Naples, FL
kudos:1

1 recommendation

reply to ISurfTooMuch
said by ISurfTooMuch:

said by Cheese:

said by ISurfTooMuch:

And, since these types of folks often have a very high opinion of themselves, they aren't going to take the advice of a bunch of posters on an Internet forum.

And they need to listen to people on here why?

Well, for one thing, if they'd bothered to listen, maybe they wouldn't have gotten themselves into such a horrible deal. It's been no secret here that Verizon was dumping these more rural areas, and it's been known for years that the copper plant in these areas has essentially been allowed to rot. And not to mention the fact that wireline phone service has been in decline for the last decade or so, and cable has been eating DSL's lunch for about the same time period. None of this is to say that you can't turn things around, but you'd better be ready to hit the ground running with some major upgrades to the network the moment you sign the deal.

If the FairPoint folks had been paying attention, they'd know this.

For one thing, a business, for the most part, is not going to listen to end users on a message board, especially regarding a acquisition/merger.

ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL
reply to Badonkadonk
said by Badonkadonk:

It simply sounds like either bad due diligence (which I doubt) or someone higher up wanted the deal bad enough.

I don't disagree that the signal-to-noise ratio here can get pretty low, but the consensus was, from that beginning, that this was a bad deal for FairPoint.

And you make a good point about someone higher up wanting the deal badly enough. And that's precisely why everyone else should have been listening to what was being said about this deal as it unfolded. And yes, I've seen my share of mergers, and when one person is pushing it really hard, and when you find other, smaller voices, warning that it's a really bad idea, you'd better pay attention, because, more often than not, that powerful person trying to ram it through almost always has their own agenda, and it's hardly ever good for anyone else.

ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL

1 recommendation

reply to Cheese
I'll bet Netflix had wished they'd listened. They finally did, but they've been through an extremely rocky period in the meantime.

I'm sorry, but I just have to take the opposite view on this. Paying attention to what people are saying about your company can be very valuable because you get a different perspective that you don't get when you only listen to other insiders. I'll bet Clear Channel thought it was a nifty idea to buy a ton of radio stations, gut their operations, and centralize programming decisions. I'm sure they thought they'd save tons of money and generate enormous economies of scale. Which they did. However, people were not only moaning about the loss of localism, but they were also warning that this was ultimately a recipe for disaster because listeners would leave. And they were right. Listeners have abandoned terrestrial radio in droves, and Clear Channel is a shell of what it was at the beginning of this adventure. And Citadel Broadcasting, another big chain broadcaster, is gone, having gone into bankruptcy and being gobbled up by Cumulus. Companies like Clear Channel and Citadel have wrecked terrestrial radio, all despite many warnings from stupid message boards.


cdru
Go Colts
Premium,MVM
join:2003-05-14
Fort Wayne, IN
kudos:7
reply to Badonkadonk
said by Badonkadonk:

And I don't go for the fact that the sophisticated NY attorneys threw the wool over FP's attorneys. That about as stupid a comment as I've read regarding this as well. Inside counsel rarely does these deals. Mostly it's handled by outside firms that do M&A as their bread and butter.

It simply sounds like either bad due diligence (which I doubt) or someone higher up wanted the deal bad enough.

I don't buy it either. This wasn't Ma and Pa Kettle going into town and getting swindled by a slick car salesman. Not saying that all attorneys are brilliant, but I think FP would have had to hire a ambulance chaser in order for FP to be able to claim they got suckered.

Badonkadonk
Premium
join:2000-12-17
Naperville, IL
kudos:5
Reviews:
·Dish Network

1 recommendation

reply to ISurfTooMuch
The problem is that the people on message boards have no clue really. It's all conjecture on their part. I wouldn't come close to basing decisions on message board chatter by people who haven't seen the management presentations, don't have a white paper with preliminary diligence and don't get to see all the confidential documents in the data room.

Imagine if I'm outside or in-house counsel for a company and I go to the managing partner or the business guy and say, "Hey, the guys on this message board say it's not a good deal. They don't have any of the financial numbers, presentations or documents that we do, but HEY it's DSLR after all."

Not gonna fly. I sure the hell wouldn't bring it up to my boss or the involved BD guys.
--
Support the Occupy Wall Street movement--poop on a police car! »tinyurl.com/64kv5h4


woody7
Premium
join:2000-10-13
Torrance, CA
reply to ISurfTooMuch
Bingo!!!!!!
--
BlooMe

ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL
reply to Badonkadonk
No, you wouldn't go into a meeting and say that, but if enough people are talking about the bad state of the infrastructure your client is buying, the fact that the number of landline subs is declining, and the fact that DSL is getting clobbered by cable, then you should do some research into these things and present your findings accordingly. For example, why didn't Verizon rehabilitate these aging copper networks? They've obviously done their own research and decided that the investment isn't worth it. Then why are they telling you about all the benefits of buying these areas from them? If they can't turn these areas around, then why should your client think they can?

As for this advice coming from end users, that lends its own valuable perspective. If Verizon is saying these copper areas are old but still performing satisfactorily, but you have lots of people in message boards talking about the problems they're having with their service and the fact that these problems aren't getting solved, then you should start to wonder whether Verizon is being entirely candid about the state of the network you're buying. And it should also make you wonder about customer defections to both existing and potential competitors. If the natives are getting restless and are looking to leave, your client might still want to buy, but you'd better warn them that their new customers' tolerance for mistakes is going to be very low. If Verizon is saying things are fine, yet you're getting different signals from other sources, you might want to see who's being more truthful with you.

Badonkadonk
Premium
join:2000-12-17
Naperville, IL
kudos:5
Reviews:
·Dish Network
It just doesn't happen (and likely never will). To answer any of those questions, you'd have to talk to the BD guys. No one else can say.

When we do acquisitions, they're for a variety of one or more different reasons:

Branding
Distribution
IP
Competition elimination
New Product line
Expansion of existing product line

And we may or may not care about the rest of the items.

Also, only the company knows whether they actually identified the problems and negotiated a discount off the purchase price. We'd have to see the purchase agreement to know.
--
Support the Occupy Wall Street movement--poop on a police car! »tinyurl.com/64kv5h4


cdru
Go Colts
Premium,MVM
join:2003-05-14
Fort Wayne, IN
kudos:7
reply to ISurfTooMuch
said by ISurfTooMuch:

For example, why didn't Verizon rehabilitate these aging copper networks? They've obviously done their own research and decided that the investment isn't worth it. Then why are they telling you about all the benefits of buying these areas from them? If they can't turn these areas around, then why should your client think they can?

If a job pays $50k per year, someone who makes $100k annually isn't going to look at that job as an attractive employment opportunity. However someone who has been flipping hamburgers may look at it as a great opportunity. It's all in the matter of perspective.

ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL
reply to Badonkadonk
Well, it's pretty obvious that this deal was done for either expansion or competition elimination, or a little of both. But if I'm FairPoint, and I have access to $2.7 billion, then I'm going to also wonder what I can build myself for that money. Certainly not a network to cover all these states, but I'd rather have a small modern network than a large old one that needs lots of work. If I'm going to drop that kind of money on an acquisition, and if I know the network hasn't been upgraded, then I'm going to want to have additional resources available to do those upgrades. It's like buying any business. The more antiquated the infrastructure, the more extra money you need after the purchase to use to update. If FairPoint was as strapped for cash as they now claim, why did they do this deal in the first place? Sure, there can be delays, but you'd better plan a worst-case scenario out on the front end and then write that into your contract.

And I still don't think FairPoint did their homework. If nothing else, what made them think that they could turn around an area that Verizon wanted to be rid of? I'm not saying it can't be done, but it sure doesn't look like they had much of a plan to do it.

ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL
reply to cdru
True, but, in this case, it takes cash--and lots of it--to upgrade the network. If FairPoint was as close to the edge as they now claim, why did they think they could do it? $2.7 billion is a lot to lose because you don't have the resources to run what you just bought.

If I overextend myself so much when I buy a business that I don't have the cash to fix the leaky roof or repair the cash register, then I'm a fool for doing it.

Badonkadonk
Premium
join:2000-12-17
Naperville, IL
kudos:5
Reviews:
·Dish Network
reply to ISurfTooMuch
said by ISurfTooMuch:

Well, it's pretty obvious that this deal was done for either expansion or competition elimination, or a little of both. But if I'm FairPoint, and I have access to $2.7 billion, then I'm going to also wonder what I can build myself for that money. Certainly not a network to cover all these states, but I'd rather have a small modern network than a large old one that needs lots of work. If I'm going to drop that kind of money on an acquisition, and if I know the network hasn't been upgraded, then I'm going to want to have additional resources available to do those upgrades. It's like buying any business. The more antiquated the infrastructure, the more extra money you need after the purchase to use to update. If FairPoint was as strapped for cash as they now claim, why did they do this deal in the first place? Sure, there can be delays, but you'd better plan a worst-case scenario out on the front end and then write that into your contract.

And I still don't think FairPoint did their homework. If nothing else, what made them think that they could turn around an area that Verizon wanted to be rid of? I'm not saying it can't be done, but it sure doesn't look like they had much of a plan to do it.

We don't know the deal terms. Maybe the asking price was even higher and they took all that stuff into account and then mismanaged the business.

We are a bottom feeder when it comes to acquisitions and second to none when it comes to making those businesses profitable. It's done by others all the time as well. Companies see and eliminate waste that the prior owner couldn't or didn't want to do. There may have been synergies that they perceived at the time.

That being said, there are certain companies that are terrible at M&A and integration. My last employer was that way. They did a deal every few years and the last one they did was horrible. My present employer does a dozen deals a year--year after year--and I can't think of one that hasn't turned out well.
--
Support the Occupy Wall Street movement--vandalize private property! »tinyurl.com/4yaqboj


said by ISurfTooMuch:

True, but, in this case, it takes cash--and lots of it--to upgrade the network. If FairPoint was as close to the edge as they now claim, why did they think they could do it? $2.7 billion is a lot to lose because you don't have the resources to run what you just bought.

If I overextend myself so much when I buy a business that I don't have the cash to fix the leaky roof or repair the cash register, then I'm a fool for doing it.

Maybe their line of credit disappeared in the downturn. That happened to a lot of companies. That's how my company benefits. We have a lot of cash and we wait for businesses to sell for relative peanuts. We acquire much more when the economy is down and businesses are hurting.

ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL
Yeah, I saw an acquisition go bad. Two acquisitions, really. The company was called OneMain.com. I worked for them. Well, actually, the first acquisition--the purchase of small ISP's--went fine, but they couldn't integrate them into a cohesive unit to save their lives. And their new user-management system, called BOSS, was--well, words can't really describe how bad it was. Then the second acquisition occurred. The dot-com bubble burst, OneMain's stock price tanked, and EarthLink swooped in and bought them. But here's another example of a company not doing their homework. The regional ISP I worked for (we had never been integrated into OneMain proper) had a history of very personal service. We knew our customers, and they knew us, even though we had around 55,000 of them. When EarthLink came in, they decided to shut our local office down because they didn't see us getting the numbers their big call centers got. But, in the process, they lost tons and tons of customers. The local paper even did a story on how many of our customers were looking for other options, and I even got stopped by a lady in Wal-Mart who saw my t-shirt and asked if I worked for EarthLink. When I said no, that I'd been laid off like everyone else, she told me how great our company had been and how horrible EarthLink was. And I could tell how many of our business customers' Web sites never got converted properly or they'd left and headed elsewhere, since I remembered many of the domains I'd registered and watched to see what happened to them. And we were just starting to get into DSL. Well, when we were bought, EarthLink killed that off very quickly. Yeah, that was a really smart thing to do.

Badonkadonk
Premium
join:2000-12-17
Naperville, IL
kudos:5
Reviews:
·Dish Network
Integration isn't easy. We've seen it in some of our larger (multi-billion dollar acquisitions), but over time if you know what you're doing it works.

Depending on the reason Earthlink acquired your company and how much they paid, they may have gotten what they wanted. Undoubtedly the owner got a nice payout.
--
Support the Occupy Wall Street movement--vandalize private property! »tinyurl.com/4yaqboj

axus

join:2001-06-18
Washington, DC
Reviews:
·Comcast
reply to ISurfTooMuch
Agreed, how can it be a con when the terms are plainly stated? The worst part was the regulators failing to block it. Verizon was forced to support these places by taking USF funds, they were meant to provide service to unprofitable places.

Verizon made a smart business move, but it was Fairpoint that begged and pleaded to be taken. Nobody could understand why.


Twaddle

@sbcglobal.net
reply to Cheese
"For one thing, a business, for the most part, is not going to listen to end users on a message board, especially regarding a acquisition/merger."

That is one of the issues at hand with today's global economy . Many if not most Corporations do not care what the end user thinks or feels because they have very little on their minds except turning as much profit as they can without regard to any long term and as fast as they can. This is especially true when their customer base has no options but to use their goods or services or go without. With no legal recourse to protect the consumer from the less than honest actions of corporations, its open season on the consumer by the corporate establishment. This mindset will come back to haunt us all in months and years to come.


bear73
Metnav... Fly The Unfriendly Skies
Premium
join:2001-06-09
Derry, NH

1 edit
reply to Cheese
while they don't need to listen to posters from some random tech site, they should/do need to listen to the techs/engineers/system experts that all warned them that they(Fairpoint) were placing their head into the noose while standing on the edge of a plank. These folks still were too full of themselves to listen to the people knowledgeable in the systems that knew that it was a deal engineered to fail and that Verizon built the deal so they could come in at a later date and re-acquire their old customer base without all the restrictive regulations of a wire-plant/copper-plant
--


braynes
Premium
join:2005-03-14
Waterville, ME
reply to ISurfTooMuch
"I don't disagree that the signal-to-noise ratio here can get pretty low, but the consensus was, from that beginning, that this was a bad deal for FairPoint."

Fairpoint what about the poor bastards in new England in the this crap phone service. so who cares about fairpoint they wanted to play big man own a phone company. Sort of like melleon wanted a RR bought mcpp now look. fairpoint will be something we will all be paying for all are lives.
Bruce

ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL
reply to Badonkadonk
I don't recall the details of the deal, since it was over 11 years ago, but I do remember that many folks who had stock options got screwed because they were now underwater, and I don't think they got offered anything to accommodate that, well, at least not for the folks I'm aware of.

However, most of us came out OK. Back before OneMain got bought, they had already started to do some consolidation and layoffs, so they'd put forward a pretty generous severance package: over three months pay when you factored in base and extended severance. It became more or less a standing offer, even if you weren't slated to get laid off in the foreseeable future, which was probably a mistake on someone's part, so, when EarthLink took over, they were stuck with that agreement. But boy did some folks in management try to keep people from taking the severance package and leaving. They tried to tell many folks that, no, they couldn't leave if they could be transferred to other departments when their departments were closed down, even though the written agreement said otherwise. And, since some of those transfers were downward moves, and since severance was based on your last rate of pay before you were laid off...well, you can see where this was going. They tried to tell us that our salaries wouldn't be reduced when we changed departments, but no one believed that, considering it wasn't in writing and also considering how they were trying to weasel their way out of what was in writing. Needless to say, it proved to be a pretty tense standoff before we were finally told they'd let us choose to leave and take the package.

As far as what EarthLink got, it wasn't much at our facility. The building was leased, and they had a fire sale of computers before shutting down. The main things they got were the POP's and the customers. And many of our POP's covered areas where EarthLink didn't have a local presence, so I guess that's something, although, considering that shared POP's were coming on the scene pretty quickly, I don't think those held their value for long. As for the customers, I already mentioned those, and, with SBC rolling out DSL pretty widely at the time and EarthLink abandoning it, they probably only kept a few rural customers in areas served by telcos that didn't offer DSL. So, all in all, I think it ultimately was a bad deal for EarthLink, but, given their stellar track record in the last 10-15 years, they probably couldn't see it. Although, I have some grudging admiration that they're still managing to hang on, if only by a thread.

Badonkadonk
Premium
join:2000-12-17
Naperville, IL
kudos:5
Reviews:
·Dish Network
Interesting story. Thanks for sharing.

I've never been on the acquired side of the equation, but from what I've read in the various message boards, I'm glad.

Yeah, you can't trust most big business to look out for employees--everything needs to be in writing.

Sounds like it was just a bad transaction all around. I'd love to see the management presentations and white papers.
--
Support the Occupy Wall Street movement--vandalize private property! »tinyurl.com/4yaqboj