Doo-Doo Diligence and Buccaneer Businessmen
Lillian Vernon on Sun’s Watch
In 2006, Sun Capital Partners bought the company at a distress price of $10 million and installed Muoio as president and CEO. He honestly believed he could overcome the IT problem, but could not. On top of that, he was hit with postal and delivery increases—15% and 18% respectively. The price of paper also increased, adding an additional $15 million in costs.
“We trimmed overhead where we could,” Muoio told me. “We took a good whack at it, but it was too much for us. We improved the core business but did not take it far enough. Close, but no cigar.”
After a year and a half, Muoio and the investors threw in the towel. Just before Christmas 2007, they laid off 100 employees. And on Feb. 9, final bankruptcy was declared.
The idea that two private equity firms could spend four years giving CPR to a beached whale and lose more than $100 million boggles the mind.
“When Sun and I joined to acquire the company, we had a code name—it was: Project Las Vegas,” Muoio wrote in his e-mail to me. “I don’t think I need to explain that further.”
By calling the enterprise “Project Las Vegas,” it was clearly a crapshoot.
Isn’t another word for crap “doo-doo?”
As in doo-doo diligence?
1: The care that a reasonable person exercises under the circumstances to avoid harm to other persons or their property. 2: Research and analysis of a company or organization done in preparation for a business transaction (as a corporate merger or purchase of securities.)
Due diligence is like betting the horses.
Back in the 1960s, I got interested in horse racing. I bought “Ainslie’s Complete Guide to Thoroughbred Racing,” hit the typewriter, and reduced his 352 dense pages of information to 28 pages of rules and notes that I memorized.