Simmons Mattress: How private "investors" destroy productive businesses for profit

[Hannah Bell]

For most of the 133 years since its founding in a small city in Wisconsin, the Simmons Bedding Company enjoyed an illustrious history. Presidents have slumbered on its mattresses aboard Air Force One. Dignitaries have slept on them in the Lincoln Bedroom. Its advertisements have featured Henry Ford and H. G. Wells. Eleanor Roosevelt extolled the virtues of the Simmons Beautyrest mattress, and the brand was immortalized on Broadway in Cole Porter’s song “Anything Goes.”

Simmons says it will soon file for bankruptcy protection, as part of an agreement by its current owners to sell the company — the seventh time it has been sold in a little more than two decades — all after being owned for short periods by a parade of different investment groups, known as private equity firms, which try to buy undervalued companies, mostly with borrowed money.

For many of the company’s investors, the sale will be a disaster. Its bondholders alone stand to lose more than $575 million. The company’s downfall has also devastated employees like Noble Rogers, who worked for 22 years at Simmons, most of that time at a factory outside Atlanta. He is one of 1,000 employees — more than one-quarter of the work force — laid off last year.

But Thomas H. Lee Partners of Boston has not only escaped unscathed, it has made a profit. The investment firm, which bought Simmons in 2003, has pocketed around $77 million in profit, even as the company’s fortunes have declined....

http://www.nytimes.com/2009/10/05/business/economy/05simmons.html?hp

[Nikki Stone1]

1. We have to retool Wall Street and the way we look at investment.

This is sad.

[malaise]

2. You know the first time we saw Pretty Woman

hubby raised two points - they were celebrating both prostitution and the destruction of companies for sport and spite. Yep the destruction of people's hard work was blood sport promoted by the Reagan version of greed.

I maintain that Pretty Woman was great propaganda for those with a certain mentality.

[Ruby the Liberal]

3. This is what is wrong with our system.

How sad.

[csziggy]

4. When homeowners do this, they are irresponsible

When Wall Street does it, it is a wise business practice. This should be illegal.

I hope the Simmon Mattress company can survive. My current mattress is a Simmons and it is one of the most comfortable mattresses I have ever owned.

[donco6]

6. Me too.

I bought a Beautyrest Black and it is COMFY.

[Selatius]

12. Well, according to the article, they are about to be bought by another equity firm.

No doubt, there's suspicion the new buyers will simply do the same thing and then ditch the enterprise once they've recouped their initial investments and turned a profit for themselves. If true, Simmons has no future left.

[csziggy]

13. That really sucks. n/t

[The_Casual_Observer]

5. It all starts when the guy/family that owns the place decides to cash out

after that, it's all down hill.

[XOKCowboy]

8. It happened to the company I worked for for 20 yrs...

It was started by two friends with their parent's monetary help. Eventually one guy bought out the other and built the company up to over 25 incredibly talented and dedicated people. We were doing business worldwide, if we needed equipment we bought what was needed to keep our clients happy and had some very dedicated clients.

Then the owner decided that he wanted to do something else and sold out to a national company in our line of work. He and his family made a ton of money and we were left with out of state bean counters running the company. It was all about the bottom line. Equipment became old or obsolete, clients left because we no longer cared what they needed, just how much we could get out of them. The new managers started cutting overtime and raises became smaller or nonexistent. The best and brightest moved on, some of us hung on for a while but most have now gone also. I left because I could no longer stand putting out an inferior product. Now they're barely hanging on and the company rep is terrible. I don't expect them to be in business next year.

I now work mainly for a former competitor. This company is competitive and profitable in the same markets so it's not the economy dragging my old company down. It's the bloodsuckers who only look at this quarter's bottom line.

[The_Casual_Observer]

10. I see it over & over again. Employee owned is seldom an option

but I've seen that work more times than not.

[bridgit]

7. Exactly! The whole strata of E-trade babies short-selling, distress profiteering...

pushing value down and buying it then, wanton stock manipulation - private equity/sovereign funds - all that stuff has to stop, then tagged, then treated like the white collar crimes they are

[abelenkpe2]

9. It's ironic

That the ad associated with this thread is for finding the most comfortable mattress.

After reading that story I've decided that the mattresses I am about to buy for my kids bunk bed will be simmons.

[Selatius]

11. Gotta love the capitalists. They know how to make money off the labor of others.

:sarcasm: