“What is a business worth?” For Larry the liquidator (played by Danny DeVito) a business is worth the price of its stock, for Jorgy, the entrepreneur who inherited the New England Wire and Cable Company from his father, a business is about the people associated with it. The tension between these two perspectives- The shareholder view of financial economics and the stakeholder view of management- provides the basic story for the movie Other People’s Money (1991). Larry the liquidator is always on the lookout for good companies that he can buy and sell to make a profit. One day he comes across a small firm New England Wire and Cable Company that was ably managed by the second-generation of the founding family and was completely debt-free. When Larry’s offer to buy the company is refused by the owners, he pursues a hostile take-over. Larry’s attempts for the hostile takeover are repeatedly stalled by Kate, the step-daughter of Jorgy. Finally, the shareholders are asked to vote on whether they want to keep the company private and retain the existing management, or are willing to let Larry acquire the company so he could sell it and make a good profit for the shareholders. (You can check out a more detailed summary of the movie here.)
The movie is a romantic-comedy. It does a good job of presenting hostile takeovers and corporate acquisitions in a fun way. Companies, big and small, can be attractive targets for takeover and acquisition for a variety of reasons. The movie effectively portrays how a company which is apparently being run well (i.e. the management is honest and caring and the company is completely debt free) may be attractive to corporate raiders who can help shareholders get a better return for their money. The management of the company, like Jorgy in the movie, try their best to defend against these attacks using a number of tactics. The recent Microsoft-Yahoo story relates well to the movie. Microsoft made an offer to acquire Yahoo, but Jerry Yang the founder CEO of yahoo did not want to sell his company. He was able to stall the offer for a while, force Microsoft to make a better offer, and convince his board to finally reject the offer. However, as is well known, Yahoo’s problems are far from over. If the management of Yahoo is not able to come up with a plan to strategically redefine and reposition Yahoo soon (as Jorgy’s step-daughter was able to do in the movie), the days of Yahoo as an independent company may very well be numbered.
The movie is certainly worth watching, especially for students and instructors interested in topics related to corporate strategy, acquisition, diversification, takeovers, and entrepreneurship.
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In business, sales and liquidations are an everyday occurence. Sometimes more than just merchandise is for sale. In Other People's Money, Danny Devito plays Larry the Liquidator a famed corporate buyout man that purchases companies and then takes them apart to sell piece by piece for profit.
Larry's latest object of desire is New England Wire and Cable. The company has few debts, and lots of assets. Larry learns about thsi company from his computer who he nicknames Carmen. Larry decides to try to court the shareholders of New England Wire and Cable into selling their shares to him.
The President of the company hates the idea and spouts emotional talk about the company's history. Larry is unmoved by this argument. The Presidnet of the Company has one asset that Larry did not factor into his equation. This is the daughter of the company President, Penelope.
Larry has had few loves in life. He loves doughnuts, dogs, and money. Money doesen't make him fat so he loves money most of all. But with the new girl Peneleope he starts to experience a new love which complicates his plans to takeover the small company which sells wire and cable.
Penelope leads the defense against Larry's plans to takeover the company and Larry wants to win both the company and Penelope, but can he really do this? In the ending scene of the movie Larry addresses the shareholders of New England Wire and Cable. His argument is based on maximizing shareholder value. Emotions do not build companies and should not dictate the allocation of resources as Larry puts it more eloquantely.
His argument proceeds in a most dramatic fashion. Companies are formed to meet needs, rather its tangerines or wires and cables. To some Larry is the liquidator but Larry does help to create wealth and he hammers this point home to the shareholders of New England Wire and Cable.
The movie appears to be going to end with the company being acquired by Larry and slated for being broken up. But before this moment can be reached a new plan emerges, to buy the company and redirect its factory infrastrcture to make wires for airbags.