|Edgar Bronfman . . . Junior.|
Stupid Junior: He sold the family stake, and what did he go do with those $9 billion? He bought a record company! Even then, everyone knew a record company was a crap business—and this was before the internet and MP3 and iPods and bitTorrent and free music for everybody! Even then, people knew it was a terrible, terrible deal.
Because DuPont was paying a steady 26¢ per share every quarter; source here. And even though in nominal terms, it’s been a Big-Boomerang-and-Dip for DuPont stock prices ($67 back in ‘95, $109 in ‘97, $25 at the bottom in early ‘09, $50 today), that drip-drip-drip of dividends, gently rising like the slope of the breast of the hottest Victoria’s Secret model in the current catalogue . . . my!
But as Bronfman the Younger went from acquiring Polygram and Universal, to getting bamboozled with his “take-over” of Vivendi, until he was finally shoved upstairs into a no-power slot on the board, his family’s DuPont patrimony went from $9 billion to (rumor has it) less than a billion—a lot less!
Now, there’s more than just shadenfreude at work here at The Hourly G. Bronfman the Younger & Dumber is an object lesson for something seen oftentimes in the business work: The business executive who simply must make and close a deal.
It’s a kind of mania: It often happens to the scion of a wealthy family, who therefore is really playing with other people’s money, or to executives in certain corporate businesses where the measure of success is more nebulous or distant in time, like Hollywood. These executives’ sense of self-respect and self-worth depends on making deals, and closing deals—no matter how bad the deal.
So they’ll come up with a deal, plow ahead with the deal—no matter the evidence that it’s a bad deal—and close the deal, all so that their ego can feel assuaged.
And on the morning after?
So as DuPont prepares to swallow up Danisco, I just wanted us all to remember Edgar “Junior” Bronfman—remember his “Deal of the Century”—and remember Aphorism #5:
The best deal is the one you’re willing to walk away from.
Words to live by.