Clowns to the left of us
Jokers to the right
Here I am
Stuck in the middle with you

Stealer’s Wheel

Yesterday I thought Guy Hands’ resignation from the CEO position at Terra Firma was more about show than substance, I didn’t think it would change day to day behavior at the company that much.

But I read today’s "Wall Street Journal" story and believed that yes, Mr. Hands’ responsibilities had diminished, especially when it came to EMI:

"It is the second time lately that Mr. Hands’s responsibilities have been rejiggered. He stepped away from daily control of EMI last year, when Elio Leoni-Sceti, a former Procter & Gamble Co. manager, was appointed chief executive of its music division. In January, Mr. Hands appointed another Terra Firma executive, Pat O’Driscoll, to manage the relationship with EMI, further separating himself from the company."

Terra Firma’s Guy Hands Resigns Over EMI Deal

Now we’ve got the "Independent" saying:

"A source close to the financier, who rose to fame in the late 1990s as head of the Japanese bank Nomura’s securitisation business, said Mr Hands wanted to focus on running the private equity firm’s companies – which include troubled EMI – and dealing with its investors. Mr Hands, who created Terra Firma in 2002, attended more than 400 internal meetings last year, and wants to hand over the administrative burden of that part of the work to somebody else, added the source."

Hands resigns from top job at Terra Firma

The truth?  Does it make any difference?  Do you really believe Guy Hands’ day to day involvement in EMI would have any significant effect on the health of the company?  EMI’s problems are not financial, but systemic.  No one can fix them.

So really, the big mistake remains Mr. Hands’.  He overpaid for the smallest player in a dying industry.  If the big swinging dicks perform such poor due diligence, it’s no wonder we end up with Bernie Madoff.

Terra Firma investors are pissed at Mr. Hands.  Not only did they lose money, they’ve had to inject more.  All in a business that has yet to show any light, deliver any true upside.  EMI is like a fifty year old guitar player who says he can still get a deal and become as big as Springsteen.  Even Springsteen isn’t as big as Springsteen anymore.  The odds are long, it’s time for that fifty year old to face reality and get a real job.  Terra Firma is worried that daddy’s gonna pull the money.  In this case, daddy is Citigroup.  And as the Eagles once sang:

Call the doctor, I think I’m gonna crash
The doctor says he’s comin’, but you gotta pay him cash

Life in the fast lane indeed.  That’s what happens when ignorant financiers want to play in the land of entertainment.  The movie unspools the same way, time and again: money is lost, Mr. Big Shot leaves with his tail between his legs and the business remains in the hands of those who ply the boards on a full time basis, each and every day.