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Cheese
Premium Member
join:2003-10-26
Naples, FL

Cheese to ISurfTooMuch

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to ISurfTooMuch

Re: When did Karl first explain this?

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 Member
join:2005-01-25

viperlmw

Premium Member

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 Member
join:2003-10-26
Naples, FL

Cheese

Premium Member

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

ISurfTooMuch to Cheese

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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.
67845017 (banned)
join:2000-12-17
Naperville, IL

1 recommendation

67845017 (banned) to Cheese

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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.

Cheese
Premium Member
join:2003-10-26
Naples, FL

1 recommendation

Cheese to ISurfTooMuch

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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

ISurfTooMuch to 67845017

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to 67845017
said by 67845017:

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

1 recommendation

ISurfTooMuch to Cheese

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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
MVM
join:2003-05-14
Fort Wayne, IN

cdru to 67845017

MVM

to 67845017
said by 67845017:

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.
67845017 (banned)
join:2000-12-17
Naperville, IL

1 recommendation

67845017 (banned) to ISurfTooMuch

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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.
ISurfTooMuch
join:2007-04-23
Tuscaloosa, AL

ISurfTooMuch

Member

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.
67845017 (banned)
join:2000-12-17
Naperville, IL

67845017 (banned)

Member

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.

cdru
Go Colts
MVM
join:2003-05-14
Fort Wayne, IN

cdru to ISurfTooMuch

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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

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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

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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.
67845017 (banned)
join:2000-12-17
Naperville, IL

67845017 (banned) to ISurfTooMuch

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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

ISurfTooMuch

Member

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.
67845017 (banned)
join:2000-12-17
Naperville, IL

67845017 (banned)

Member

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.

Twaddle
@sbcglobal.net

Twaddle to Cheese

Anon

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
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join:2001-06-09
Derry, NH

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bear73 to Cheese

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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
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join:2005-03-14
Waterville, ME

braynes to ISurfTooMuch

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"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

ISurfTooMuch to 67845017

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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.
67845017 (banned)
join:2000-12-17
Naperville, IL

67845017 (banned)

Member

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.
ISurfTooMuch
join:2007-04-23
Tuscaloosa, AL

ISurfTooMuch

Member

To be honest, I'm not sure it was something that was in the works for long. The impression I got was that, as soon as the stock tanked, EarthLink went on a buying spree. We all came in one morning and found out we were owned by EarthLink. Even our regional VP was unaware. As far as I know, he found out in the same e-mail we got. Given that our stock fell so far in a very short time, I don't think EarthLink had to do much more than wave some cash. From what OneMain was doing (buying small to medium sized ISP's--many serving smaller cities and rural areas--and merging them), it certainly seemed like they were looking to be bought, but I don't think events transpired the way they'd hoped.

But, the thing was, it was obvious EarthLink didn't know much about what they'd bought. True, my ISP was relatively small by their standards, and our business sales division didn't get the raw numbers they did, but we were making some inroads into companies I'm sure they'd love to have now, such as a very large discount retailer everyone loves to hate. I know that one because I sold to them, and I was working directly with their national headquarters' IT department. We were also selling accounts to a decent sized insurance company and several trucking companies, and I'm not talking dialup accounts or DSL here--I mean T1's, ATM, Frame Relay, etc, and we had the people on the ground to configure, install, and support the equipment. But we never got visited once by someone from EarthLink. They just told us to stop selling, first, supposedly in preparation for a new product rollout, then we were told we were being closed down. Had they bothered to ask, I could have told them that the discount retailer sale I mentioned was part of a pilot project that had the potential to go national. I'll bet they still don't know that. Oh well, their loss.

Wow, this all sure brings back some memories. It was quite a ride.
67845017 (banned)
join:2000-12-17
Naperville, IL

67845017 (banned)

Member

Do you recall the purchase price of your company? I'm just kind of curious how much Earthlink paid, relative to their revenues back then.

We do small deals pretty quickly, but take a long time with the bigger ones. We're pretty conservative and are very thorough with our due diligence. I know that many other companies aren't. And in the go-go days, a lot of those companies closed deals quickly to just get them done without much diligence at all.
ISurfTooMuch
join:2007-04-23
Tuscaloosa, AL

ISurfTooMuch

Member

I don't recall, but I'll do some checking when I'm at my computer. I remember that CNET covered it, so I'm sure the info is out there.

But here's a fun fact. The guy who originally started the ISP that he sold to OneMain started a new ISP/telecom company right after we were shut down. Since he was the owner of the building, he just started it in an area not leased to Earthlink. He then hired back about a quarter of the employees (I even worked there for a while until I moved), grabbed a bunch of EarthLink's former local customers, and, as far as I know, the company is still there.

Now THAT'S the guy who made out like a bandit.
67845017 (banned)
join:2000-12-17
Naperville, IL

67845017 (banned)

Member

lol. Earthlink were idiots then. All our purchase agreements have non-compete and non-solicitation clauses.

Transmaster
Don't Blame Me I Voted For Bill and Opus
join:2001-06-20
Cheyenne, WY

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What an excellent example Clear Channel though they could in effect corner the broadcast market. They automated the small market stations and homogenized most of the big market stations so you couldn't even tell what station you where listening to. If you will recall Clear Channel was in cahoots with the RIAA in their attempt to kill streaming radio with ruinous licensing fees. This ultimately failed. Now the only place that has diversity in listening choices is on line. Belatedly Clear Channel came up with iHeart radio to stream a number of it's stations but even then there are unforeseen consequences. iHeart Radio in effect turned the entire Nation into one radio market Which is now dominated by the few Clear Channel stations that are different from the rest. Presently the number one station on iHeart is KFI, Los Angles. So instead of people tuning into their local station on the iHeart app on their smartphones they are going to just a few stations such as KFI. Now Clear Channel is trying to make more money from iHeart Radio by trying to emulate Pandora.A day late and a dollar short move.
russotto
join:2000-10-05
West Orange, NJ

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said by ISurfTooMuch:

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

It was so obviously going to go down this way, I don't believe they were just not paying attention. Figure out who, in a decisionmaking capacity at Fairpoint, benefited from the deal, and you'll know why it happened.