Silicon Bowery

Pink Slips for EMI Dealmakers

Image via Wikipedia

Apparently not even PE guys can figure it out.  Article in the FT yesterday stating that the top two EMI dealmakers from Terra Firma are getting canned.  You might remember that Guy Hands bought the music business in mid-2007 in a £6.2 billion ($7.8 billion) transaction and put in these two guys [Chris Roling as COO and CFO and Ashley Unwin as COO for the U.K. and North America] to run the place.

Let’s get one thing straight - Guy Hands is an amazing dealmaker with a distinguished track record of success in the private equity business.  That said, I never really understood this deal in the first place.  Valuation was very high, the deal was highly leveraged and Terra Firma used 43% of their entire third fund’s equity to finance the deal [$1.5B out of a $3.5B fund].  For such an imporatant deal, I’m also not sure Roling and Unwin were really qualified.  They came from senior roles in the procurement/logistics and HR businesses respectively.  Roling’s only experience on the media side was as CFO of Getty Images while Unwin has no experience in this business.

The music business is filled with talented people, both young and old, with years of experience and fresh perspectives - I’m not sure making this bet was the right call.