Tuesday, January 11, 2011

Junior, What Were You Thinking?

DuPont Chemical’s been in the news—they’re going ahead with a big merger, buying up Danisco (a Danish company, the world’s largest producer of food additives) for a reported $5.8 billion

Edgar Bronfman . . . Junior.
(Definitely junior—definitely.)
—Boy!, does this deal bring back memories! I remember 1995 like it was yesterday!—when Edgar Bronfman, jr., sold the Bronfman family stake in DuPont for $9 billion dollars—and I bet he and his family remember it too! Yeah! Remember it like a living nightmare!

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.


  1. Did he do it while his father was still alive?

  2. Reading his profile on wikipedia you'd think he was a brilliant business man. And check this out, he was even up front in bringing down napster instead of buying it (one of the most disastrous business decisions ever, by the way).

  3. Research shows that after the first generation creates and builds the wealth, only 33% of the second generation will keep the wealth that their parents created and build. By the third generation, only 10% will keep and maintain the wealth that their grandparents and parents created and built.

  4. I remember that deal when it went down too!
    But I also remember that, at the time, "Content is King" was the Internet mantra.
    So there was a general land grab for digitaizable content.
    At the time the press lauded Bronfy Jr for his "daring visionary genius" in
    cornering the content market.
    Me -- I didn't see how he was going to monetize it.
    Still see that with ego deals today ... like when eBay bought Skype. WTF?

  5. Tess of Kansas says: With stories like this, my hubby often says: From short sleeve to short sleeves in three generations. (I don't quite understand the expression, but he and others seem too).


Knock yourself out!

The cult of stability is a culture of death.