Kayser Wealth Strategies

So after suspending trading in their shares yesterday, today Dick Smith has announced that it is going into Voluntary Administration.

Surely that has to be some sort of record!!

A quick recap:
* Woolworths decided to sell off the Dick Smith business in 2011 – for about $115 million – to private equity firm Anchorage Capital Partners.
* The private equity firm did its magic and in the space of 2 years, re-floated the business as a stand alone company on the ASX, valued at $520 million (a tidy profit for a few year’s work!!!).
* In the two and a bit years since, the company has imploded to now be in the hands of the administrators, and most likely to be found to be worthless (for shareholders at least) – hopefully all employees and trade creditors get the money they are owed!

So, like the headline says, surely that is some sort of record – re-floating a business for half a billion dollars to have it all disappear in around two years!!

What can we learn from this:
* Be VERY careful when you buy into a stock market float where the seller is private equity! They have already made all the easy wins! What do you know that they do not?
* Perhaps Woolworths management was actually pretty clever in selling for $115 million when they did. (note that at the time of the re-floating, Woolworths was hammered in the press about how they should have made more from the sale). And Woolworths is still getting hammered for their Masters business decisions – who knows perhaps their decisions on that business will turn out to be right too?