20+ years in tech and finance and I still can’t believe liquidation preferences are legal.
Even among shareholders, a group of insiders in a conference room can self-deal to keep all the money for themselves and screw common stockholders who had no representation in that room.
bix6 50 minutes ago [-]
From the guardian: “But about 220,000 investors, who contributed £75m in crowdfunding across seven “equity for punks” rounds, could walk away with nothing.”
I used to love the idea of crowdfunding but then I watched a bunch of people buy worthless common stock and get hosed over and over.
TheJoeMan 19 minutes ago [-]
Part of the issue is that somehow you can buy just the "assets" half of a company and ignore the "liabilities" portion. And the assets include all the branding and brand name. So an essentially new copy of the previous company is made while fleecing all on the liabilities side.
For the bars that are being closed, they are less closed and more like abandoned remnants of the now-dead previous company. Perhaps the shareholders should just reclaim the abandoned items of value physically.
dmurray 2 minutes ago [-]
> Part of the issue is that somehow you can buy just the "assets" half of a company and ignore the "liabilities" portion.
You really can't and they didn't.
If Brewdog has creditors who lent it money or suppliers who are waiting on payment, then they will be getting paid as part of the deal or they will have agreed to a restructuring, up as far as being offered first refusal on the company's assets.
Brewdog's existing management could have made the exact same closures without selling the company.
If retail investors lost out here, it's because they were overly optimistic in the first place, or just unlucky, not because they're getting cheated in this deal. You can tell this because the institutional investors are also getting nothing out of it.
daedrdev 25 minutes ago [-]
Please note its not just them, this article says no equity holders will get anything
IncreasePosts 10 minutes ago [-]
Well, the "investment" came with perks like free beer occasionally, 15% off your tab, invite to private events, etc. Stuff you don't get when you buy a share of MSFT. In my mind if an investment comes with perks like that it's more of a donation than an investment
roughly 42 minutes ago [-]
As George Carlin said, “it’s a big club, and you’re not in it.” Capitalism is not for the little guy, or at least not the version we’ve built.
ericmay 19 minutes ago [-]
It's a good quote, but it is misapplied here.
Nothing is stopping you from investing in a company, or putting your money into a stock or other investment. If anything, over the years the club has become a lot less exclusive. When did Carlin say that? Think about how much more access any given person, at least in the United States, has to financial products.
roughly 10 minutes ago [-]
Right, just like all of those people who put their money into Brewdog and then got nothing for it, while the larger investors potentially got made whole. It's almost like there's two classes of investors or something - common people, and then another smaller set - a club, say - that the common people are not part of.
You do not have access to the investments or financial instruments that the ultrawealthy do. Your investments are not like their investments, your returns are not their returns, the rules and regulations you face are not the ones they face. They are playing a different game than you, even when they're doing it with your money.
pwdisswordfishy 13 minutes ago [-]
... it's from 2005, at the height of such access, so much so that a glut of "toxic assets" led to a worldwide recession.
throw0101a 4 minutes ago [-]
> ... it's from 2005, at the height of such access, so much so that a glut of "toxic assets" led to a worldwide recession.
I think such access has increased since 2005: discount- and no-fee brokerage accounts, and the awareness of index funds, has grown in the last twenty years. A couple of decades ago Vanguard's average fee were over 20bps, and today you can get their total market fund (VTI) for 3bps:
Are you living in a separate system that’s not associated with capitalism?
If so I’d love to know what that is so I can go there.
daedrdev 24 minutes ago [-]
No equity holders get anything here, regardless if they had common stock or not
afavour 1 hours ago [-]
An illustrative lesson to anyone who joins a startup with the promise of a ton of stock: the company can make it worthless whenever they feel like it. Always remember that.
As for Brewdog itself, there’s a lesson in VC mindset there as well I think. Everything doesn’t have to grow to be massive. You can stay a sustainable size if you want to. But alas the temptation to keep expanding is always too strong, and often leads to flameouts like this.
nailer 58 minutes ago [-]
Brewdog also sold useless stock to customers
> And they said no equity holders - including those who invested in the brewer's Equity for Punks scheme - would get any return from the deal.
rahimnathwani 16 minutes ago [-]
The article says:
In 2017 a US equity firm TSG Consumer Partners acquired a 22% stake in Brewdog. But unlike the Equity for Punks' "ordinary" shareholders, TSG was given "preference shares". That meant that if Brewdog was sold, TSG was first in the queue to get back its investment plus any return owed, possibly leaving little or nothing for small investors.
It seems the preference shares weren't just 1x liquidation preferences. The 'plus any return owed' was 18% per year if, as I imagine, those shares are the 'C Preferred Shares' described in Brewdog's Companies House filing on 7 Jun 2017. ("Statement of capital following an allotment of shares on 6 April 2017"):
5 Statement of capital (prescribed particulars of rights attached to shares)
Class of share
Preferred C Shares
Prescribed particulars
Amount") shall be applied as follows:
1. an amount shall be distributed among the holders of the Preferred 'C' Ordinary Shares which shall be the greater of:
a) the Deemed Acquired Price of all Preferred 'C' Ordinary Shares together with, in respect of each Preferred 'C' Ordinary Share an amount equal to 18 per cent of the Deemed Acquired Price per year (based on a 365 day year) accruing daily and compounding annually from the date of issue up to and including the date of the return of capital; and
b) such amount of the Distribution Amount as would be applied to the holders of the Preferred 'C' Ordinary Shares if they ranked pari passu with 'A' Ordinary Shares and 'B' Ordinary Shares; and
2. any balance of the Distribution Amount following the application of the amount referred to in (1) above shall be applied to the holders of the 'A' Ordinary Shares and the 'B' Ordinary Shares (in accordance with the terms of the Articles of Association), provided that in the instance that Article 6.2.1(a) applies, the Warrant Shares shall have nil value for the purposes of Article 6.2.2.
Any return on Preferred 'C' Shares shall be made amongst their holders pro rata as nearly as possible to their respective holdings of Shares of that class.
This may seem like a lot, but it's a common structure for private equity deals, and we have no way of knowing whether that's the best deal that Brewdog's management could have struck at the time.
mikkupikku 59 minutes ago [-]
I've been hearing buzz that the whole alcohol industry is in trouble, from a perfect storm of cultural changes that culminate in young people drinking less, and particularly drinking less in bars.
With that context, it seems notable that the booze company in question here was purchased by a "beverage and medical cannabis" corp.
pixl97 52 minutes ago [-]
It also seems like GLP-1 drugs may reduce drinking too.
grubbs 30 minutes ago [-]
Started ozempic over a year ago. I can do like one beer per social outing these days.
jotux 18 minutes ago [-]
Tariffs, and retaliatory tariffs, have really messed up the US export market for alcohol too.
Maybe so. But it's not just the price of booze which is the problem; other problems include online dating (meeting people is now less of a reason to go to bars), cultural apprehensions about hooking up while drunk, and cannabis providing a superior experience (at least in the US, maybe less of a factor in the UK?)
medwards666 51 minutes ago [-]
Cannabis in the UK is still illegal, so unless you're picking up weed from your local dealer, it's not a big thing outside the home.
But price of booze is killing pubs here. Getting close to £8 a pint now in London. £10 for a pint of Guinness in many bars.
ducktastic 14 minutes ago [-]
A few years ago there was a group formed in the UK to designate cask ale/pub culture to be recognized as intangible cultural heritage through UNESCO-- following Belgium's successful foray into its brewing/beer culture being designated this way. There are a few documentaries on youtube
roughly 43 minutes ago [-]
Is “have been made redundant” normal phrasing in the UK, or did the BBC just decide to use that kind of bloodless phrasing for “fired?”
TimFogarty 34 minutes ago [-]
Being made "redundant" isn't just an synonym for being fired. It has a specific legal meaning in the UK [1]. When employees are made redundant they are entitled to certain rights including statutory redundancy pay [2]. So it's not just a euphemism in UK contexts. And yes this is normal phrasing in the UK.
Cool, thank you - it was an awkward enough phrase that it was either a legal term or a management euphemism, glad to hear it was the former and the BBC wasn't just parroting MBA-speak.
ipsento606 39 minutes ago [-]
being fired and being made redundant are very different under UK law
Redundancy is closer to "layoff" than "fired". One is for a clear cause, the other is just "we don't feel like paying you money because a second employee can do that job in addition to his own".
4ndrewl 37 minutes ago [-]
It's quasi-legal. You can be "fired" for all sorts of reasons, but in making a post redundant the employer can't then rehire for that position, if large numbers of posts are being made redundant then there needs to be consultations etc.
pelagicAustral 42 minutes ago [-]
Is the bloodless phrasing for "sacked"...
roughly 40 minutes ago [-]
I mean is it in common enough use that it shouldn’t stick out to me that a newspaper decided to use it instead of “fired,” “sacked,” or “laid off?” It’s got a whiff of “was involved with a shooting.”
alias_neo 31 minutes ago [-]
It has legal implications, as others have expressed.
It means your position was made redundant, and it allows you to be terminated with little legal complication, but on the understanding that the same position can't be re-hired for within a period, I think it's 6 months.
Of course in reality it's not that simple, you get "made redundant" then they rephrase the job title a bit and hire someone else.
Redundancy in the real, proper form is a consultation process where they will try, if possible to relocate people into other positions, government does it all the time when there's cuts, and they'll often offer voluntary redundancy where they pay you X amount to quit, it's usually a reasonable sum and should leave you with more than enough cash in "normal" circumstances to find another job comfortably, or see you through to retirement if you're pretty close.
Sometimes it's just a way to get rid of people who are shit or you don't like.
If you're gonna lose your job, being made "redundant" is the way you want to do it.
jebarker 39 minutes ago [-]
It’s very common phrasing in the U.K.
bell-cot 1 hours ago [-]
Not a Brit - but I've been seeing "times get even worse for UK pubs, with yet more closing" stories for years now.
And the BBC seems torn between lambasting a corporation for screwing the little guys...and admitting that the whole works was a hopeless money-loser, with a mountain of debt.
testfrequency 55 minutes ago [-]
Brewdog is pretty much a TGI Fridays that’s pretending to be edgy.
People very much don’t like their beers, the atmosphere feels fake, and there’s significantly better options in any major UK city.
It’s a shame they are closing and I feel for the employees, but nobody local really believes they are a respectable place, touristy really.
While UK nightlife/drinking/pubs like every other city in the world is slower since COVID, I still have many friends from around the world who come visit and can’t believe how busy our cities and nightlife are compared to their city back home (NYC, SF, LA, Berlin, Sydney to name a few).
nailer 52 minutes ago [-]
Before Brewdog if you wanted IPAs in 2000s england you paid 8 quid for a single small bottle of imported Racer 5 from Utobeer in Borough Market. They weren’t the entire change but they were a big part of it.
testfrequency 49 minutes ago [-]
Oh no doubt, credit where credit is due. They served a purpose, but like anything cool in life, expansion and profits ate their soul and there are obviously so many better places to enjoy a pint (or grapefruit) these days :)
edoceo 27 minutes ago [-]
I'm sure we're in agreement that, at least in UK, there's been better pubs for 200+ years. I don't know why to go to a chain-pub with some mega-factory beer when the old-local serves a fine bitter from the same county. Am I old?
tene80i 49 minutes ago [-]
Pubs have been in decline for years, because people don't go / drink as much, and because of our starting position: this is a country where there are pubs everywhere. But Brewdog is a chain of pubs and a brewery – this is much larger than the standard story of "village supporting three pubs can now only support two".
As for the "torn" reporting, there's no contradiction – companies can go bust ethically or unethically. You don't have to screw your retail investors / fans. You just can. And they have.
tsak 1 hours ago [-]
That's not very punk, is it?
bonesss 22 minutes ago [-]
Stealing the money, faffing off, and not fully knowing how to play guitar? … it’s a kind of punk.
TheChaplain 56 minutes ago [-]
No conspiracy here.
Brewdog had a loss of 37m GBP last October, and went into something similar to Chapter11(?), american company bought the remains and saved what had any value left.
So not really "evil company buys good company and fires everyone" IMHO.
edit: useless at spelling...
klustregrif 8 minutes ago [-]
Evil company took money from customers with promises of a different kind of company, too their own fortune in hiding and let the company explose the face of the customers is the news.
You might say "but that's nothign new" but that is what makes it news because Brewdogs campaigns where exactly focues on selling cutomers the idea that they where inf fact something new.
The fouders are rich any any customers who invested is left with nothing. That's the news.
I know the times are changing and people now take it for granted that a cab driver might be selling heisenbergs securities while he drives around customers, for someone to pick up a bit of crypto gambling while they wait to reach their destination.
But it used to be that financial investment was somewhat protected exactly to avoid these types of companies defrauding non-investment savy customers, but brewdog did just that. They claimed that getting a couple of shares along with your beer was ok because it was a new type of company sticking it to the man, but at the end of the day they wheren't punks they where just capitalists putting on customes to scam as much money from their customers as possible.
AndrewKemendo 13 minutes ago [-]
Seems like a collapse of the alcohol market would be a benefit on the order of removing leaded gas
But don’t let my biological logic stand in the way of cultural madness - if a coherent society in your view requires a poison in order to facilitate then that society is probably not worth keeping going
Rendered at 20:06:51 GMT+0000 (Coordinated Universal Time) with Vercel.
Even among shareholders, a group of insiders in a conference room can self-deal to keep all the money for themselves and screw common stockholders who had no representation in that room.
I used to love the idea of crowdfunding but then I watched a bunch of people buy worthless common stock and get hosed over and over.
For the bars that are being closed, they are less closed and more like abandoned remnants of the now-dead previous company. Perhaps the shareholders should just reclaim the abandoned items of value physically.
You really can't and they didn't.
If Brewdog has creditors who lent it money or suppliers who are waiting on payment, then they will be getting paid as part of the deal or they will have agreed to a restructuring, up as far as being offered first refusal on the company's assets.
Brewdog's existing management could have made the exact same closures without selling the company.
If retail investors lost out here, it's because they were overly optimistic in the first place, or just unlucky, not because they're getting cheated in this deal. You can tell this because the institutional investors are also getting nothing out of it.
Nothing is stopping you from investing in a company, or putting your money into a stock or other investment. If anything, over the years the club has become a lot less exclusive. When did Carlin say that? Think about how much more access any given person, at least in the United States, has to financial products.
You do not have access to the investments or financial instruments that the ultrawealthy do. Your investments are not like their investments, your returns are not their returns, the rules and regulations you face are not the ones they face. They are playing a different game than you, even when they're doing it with your money.
I think such access has increased since 2005: discount- and no-fee brokerage accounts, and the awareness of index funds, has grown in the last twenty years. A couple of decades ago Vanguard's average fee were over 20bps, and today you can get their total market fund (VTI) for 3bps:
* https://archive.is/https://www.economist.com/finance-and-eco...
* https://investor.vanguard.com/investment-products/etfs/profi...
And not just the US, but in many countries:
* https://www.vanguard.ca/en/latest-updates/price-cut
If so I’d love to know what that is so I can go there.
As for Brewdog itself, there’s a lesson in VC mindset there as well I think. Everything doesn’t have to grow to be massive. You can stay a sustainable size if you want to. But alas the temptation to keep expanding is always too strong, and often leads to flameouts like this.
> And they said no equity holders - including those who invested in the brewer's Equity for Punks scheme - would get any return from the deal.
With that context, it seems notable that the booze company in question here was purchased by a "beverage and medical cannabis" corp.
But price of booze is killing pubs here. Getting close to £8 a pint now in London. £10 for a pint of Guinness in many bars.
[1] https://www.gov.uk/redundancy-your-rights
[2] https://www.gov.uk/redundancy-your-rights/redundancy-pay
https://en.wikipedia.org/wiki/Redundancy_in_United_Kingdom_l...
https://www.gov.uk/redundancy-your-rights
It means your position was made redundant, and it allows you to be terminated with little legal complication, but on the understanding that the same position can't be re-hired for within a period, I think it's 6 months.
Of course in reality it's not that simple, you get "made redundant" then they rephrase the job title a bit and hire someone else.
Redundancy in the real, proper form is a consultation process where they will try, if possible to relocate people into other positions, government does it all the time when there's cuts, and they'll often offer voluntary redundancy where they pay you X amount to quit, it's usually a reasonable sum and should leave you with more than enough cash in "normal" circumstances to find another job comfortably, or see you through to retirement if you're pretty close.
Sometimes it's just a way to get rid of people who are shit or you don't like.
If you're gonna lose your job, being made "redundant" is the way you want to do it.
And the BBC seems torn between lambasting a corporation for screwing the little guys...and admitting that the whole works was a hopeless money-loser, with a mountain of debt.
People very much don’t like their beers, the atmosphere feels fake, and there’s significantly better options in any major UK city.
It’s a shame they are closing and I feel for the employees, but nobody local really believes they are a respectable place, touristy really.
While UK nightlife/drinking/pubs like every other city in the world is slower since COVID, I still have many friends from around the world who come visit and can’t believe how busy our cities and nightlife are compared to their city back home (NYC, SF, LA, Berlin, Sydney to name a few).
As for the "torn" reporting, there's no contradiction – companies can go bust ethically or unethically. You don't have to screw your retail investors / fans. You just can. And they have.
Brewdog had a loss of 37m GBP last October, and went into something similar to Chapter11(?), american company bought the remains and saved what had any value left.
So not really "evil company buys good company and fires everyone" IMHO.
edit: useless at spelling...
You might say "but that's nothign new" but that is what makes it news because Brewdogs campaigns where exactly focues on selling cutomers the idea that they where inf fact something new.
The fouders are rich any any customers who invested is left with nothing. That's the news.
I know the times are changing and people now take it for granted that a cab driver might be selling heisenbergs securities while he drives around customers, for someone to pick up a bit of crypto gambling while they wait to reach their destination. But it used to be that financial investment was somewhat protected exactly to avoid these types of companies defrauding non-investment savy customers, but brewdog did just that. They claimed that getting a couple of shares along with your beer was ok because it was a new type of company sticking it to the man, but at the end of the day they wheren't punks they where just capitalists putting on customes to scam as much money from their customers as possible.
But don’t let my biological logic stand in the way of cultural madness - if a coherent society in your view requires a poison in order to facilitate then that society is probably not worth keeping going