You might also be interested in
Replies (2)
Please login or register to join the discussion.
If you are wondering . . .
If you are wondering why I said European Home Retail lost perhaps £40m to £50m when they bought a business for £38m and sold it three years later for £4m, the reason is that after they purchased it they invested time and money in developing the business (or attempting to). But their plans came to nothing and they sold it off cheaply - losing, in effect, the bulk of the purchase price and the money subsequently invested in it.
But that sale was in 2003 and the group finally collapsed in late 2006.
It is a moot point whether the Farepak customers would have behaved any differently whatever the auditors of the group had done - but that is not the issue which the FRC will be addressing.
Arguably the biggest single factor in the group's collapse was the decision in 2000 to purchase DMG for £38m (and the bank's decision to support that) - £33m of that purchase price was accounted for as 'goodwill' which had to be written off a few years later.
David
the market has been rigged for too long
in capitalising most of the purchase price as goodwill in 2000 was corporate financier's/private equity investors favourite way of dumping debt into solid trading companies-it was happening everywhere....on the back of debt finance so led to the wind up of woolworths and now comet and soon four seasons healthcare.
now its the companies' staff and headcount that are paying the price not the private equity advisers.
Ernst and Young are the only big 4 member who have not been envolved in the autonomy stich up of hewlett packard.