Monday, July 12, 2010

Will Hugh Hefner Take Playboy Private? He Should

Reports are out that Playboy Enterprises founder (and majority shareholder) Hugh Hefner has made an offer to buy the shares he doesn't currently hold and take the company private. MSNBC says his offer values the company at $185 million.

According to the Financial Times, the company's board has not yet decided how to respond. (I wonder what they could do even if they didn't want to agree; if Hefner's the majority shareholder, wouldn't he wield the most weight on the board?)

Nonetheless, the company should go private. The extra costs associated with being a public company are wasteful even in good times, and they're unacceptable during rough times. Also, Hefner has been quoted as saying that the worst decision he ever made was to take the company public in the early 1970s. This could undo that damage, save money, and restore his control over a company and brand that has had some tough times.

Except for the obvious initial ability to reap money from a public offering, I fail to see the joys of public companies. It's – at the risk of sounding like a right-wing or left-wing loon – similar to communism: nobody at the top of public companies are usually held responsible when things go wrong (and in fact they often get a golden parachute from their pals on the board), and when things go well, the money is often squandered in ill-conceived mergers and acquisitions that fail to deliver real value. Public companies rarely have long-term vision, and all-too-often suffer from short-sighted focus on quarterly results. Give me a wisely run private business any day.

You go, Hef!
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