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.
Which isn't to say preference stacks (like debt stacks) can't get absurd when a failing company is doing anything it can to stay alive, but standard investor terms (1x liquidation preference) simply mean you're first in line to get your money back if the company is liquidated for less than the price you paid.
The self-dealing bit is generally already illegal and orthogonal to liquidation preferences.
Otherwise, the risk is investors put in $1m for 10% of the company, only for the founder-CEO to decide a month later - perhaps totally genuinely and honestly after initial R&D - that the entire business plan wasn't viable after all and the best thing for stockholders is to liquidate the company... and then walk away, personally, with $900k while returning only $100k to the investors. And obviously because this scenario is possible, there would be great temptation among dishonest founders to "realise" their companies "aren't viable" in order to walk away with all the cash. Something has to protect investors from this outcome, and remove the perverse incentive on founders to promptly liquidate after getting investment. A liquidation preference where the investor gets repaid before any distributions go to other stockholders is one way of achieving that protection; what alternative would you prefer?
As for liquidation preferences with a multiplier (i.e. we get paid back X times our investment before anyone else gets anything), eh, I wouldn't outright make them illegal, but it's less clear to me they are always serving a legitimate purpose, and they may grossly mislead the public about the actual valuation of the company implied by a given funding round AND mislead naive common stockholders and options holders about how much of the company they really own and what they can really expect to make in an exit.
This is actually percisely one of the main ingredients of a "(whatever) free market" - to put in a contract what you want as long as it is not against the law.
?
Most people (on the employee side) realize this is true if the company does not make a successful exit but only learn that the company can both exit AND their equity can be erased via dilution and preferences the first time they are screwed thusly.
“One too many” ills shatters the benchmark of “life is good”. Not good enough (that much … you may actually understand).
We have been deficient, through and through.
can you prove that it's free-market capitalism and multiparty democracy? because i see this opinion espoused a lot online.
But new money may allow buyouts of existing at that time so early team or investors can cash out a bit early
And common doesn't cash out till IPO or private market equivalent, or yes, gets screwed
Hopefully they took advantage of the discounted beer.
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.
I don't see how there's many real investment opportunities where crowdfunding wouldn't result in largely unfavorable terms for the crowd.
The "I have a software proof of concept, but I need money to make it usable" is also a good way, with a lot more certainty of outcome, but it's one that doesn't strictly require crowdfunding. And the author better publish what he has at the end of the funding.
All those variations of you getting equity or repayment are just bad.
Edit to add: Seems even Disney did offer perks as well to shareholders, https://www.disboards.com/threads/do-you-own-disney-stock-wh...
The big cruise line companies will give shareholders on-board credit, Berkshire Hathaway has sales from their subsidiaries at the yearly meeting, Intercontinental Hotels has discounts, etc.
One of the customer service backdoors for some companies is to buy a share and contact investor relations if you are having a problem.
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.
Just like anyone who puts their money into an investment that fails... Stocks go up, stocks go down. I don't recall the exact details of the Brewdog investment scheme but some people losing their hat here is just a normal thing that happens in capital markets, otherwise investing wouldn't work. There's a reason that the predominant advice is to just set it and forget it with S&P 500 funds or total market (US or global) funds. It's up to you as an independent person to identify good opportunities for yourself or to consume and understand advice.
> 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.
This is directionally true and angsty but it's beside the point. What's the alternative? Nobody gets to invest in anything?
While "the wealthy" have access to other opportunities that you don't have access to, you still have access to enough opportunities to make money.
We are both saying that the rules and conditions under which you and I invest in companies and the market are substantially different than those in which the ultrawealthy invest in the market, and ours carry both higher risks and more onerous terms. You can argue whatever you want about why that is or whether it should be, but we're not all on a level playing field, and that's relevant especially in an era when all of the answers to "how do I make myself secure against the vicissitudes of fate" involve "investing" in the market.
[1] https://littlelaw.co.uk/p/the-1-billion-brewdog-deal-that-le...
This statement is not supported by the link you posted, nor any other reporting I've seen on the matter. What I have seen is that TSG is senior to all of the other equity holders, so if there's money to be had, they're getting it before the small holders.
Also from your link:
> TSG was promised an 18% compound return on its investment (which means the amount they’re owed grows by 18% each year, with each year building on the last).
> TSG’s preference shares entitle it to an 18% compound return on its £213 million investment. That return has snowballed over time. By 2024, it had grown to around £801 million.
I can't say for sure, but I don't believe those terms were available to the average investor.
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.
Maybe not for much longer: https://www.bbc.com/news/articles/cjendwk7979o
MBAs don’t seem to understand that where and how a beer is made is important.
I also think product has suffered.
I seem to remember more interesting and very good beers available.
Like, where did all the fabulous Gose varieties go?
It seems like everything available today is a hazy IPA or a basic lager. There used to be such a breadth of flavors.
The other child comments about GLP-1 is also correct. That also seems to be a source of the protein craze going on right now.
The average person is pretty clueless about diet and their doctor told them to get XX grams of protein per meal, and fast food cafes and establishments adapted to those dietary instructions.
Also, the brewpub culture is becoming TGI Fridays-ified.
TGI Friday’s was a trendy singles bar for boomers at the time, now it’s a watered down boring family restaurant, just like many craft breweries which are stroller-fests.
I don’t even know what Gen Alpha/younger Gen Z is up to. Staying inside online? Maybe going more out to party oriented clubs rather than mellow brewpubs?
Finally, anyone into indie beers knows that brewdog has been corporate suckage for years.
I love drinking craft beer. but when a single craft beer reaches up to $15 a beer, there's only so much I will partake, especially if I can have a $1 coors at home (which imo is still an expertly made product).
similarly, canned vodka sodas or malt bevages (like whiteclaw) easily hit the $10-$15/can mark at establishments. it's no wonder people don't want to drink out.
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.
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.
Is the UK about to see public demand for investment reform?
We could use reform in the US lately. I'm not seeing many experienced people who believe in startup equity anymore, nor who are aligned with the success of the company. (Except for founders and VCs.)
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.
[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...
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.
The third one was a little different, they just said this entire country is redundant were moving operations abroad. So everyone was gone.
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).
But I'm a millenial. Liking IPAs is a millennial trope and younger people like less intense flavours.
Sorry, but you don't know 'people'. Not all. You could only speak for yourself here. If you read the article you may realize that some 'people' liked it. here and there. It was not government or military contract that brough in all that money but the 'few' pints added up to the sum. You don't have to look down people to feel good, just have some drinks perhaps....
If you’re from the UK, you’d also know brewdog is not nearly as busy as it once was. Of course people like it because it’s convenient, but so is going to a spoons and paying half as much for the same quality but less cool interior.
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.
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