Our Choices For Biggest Business Blunders Ever
Posted by: charlottekristy on 01/03/2018 03:46 PM
Getting ready to sell your business? Hopefully it won't go down as a big blunder. But regardless of how bad of a deal you make, it likely won't rate as bad as the ones on this list--which we have decided are our choices for history's worst-ever business blunders.
1) First on our list is a transaction that takes us all the way back to 1626. That's the year that the Carnasee natives traded a fairly stylish plot of land called New Amsterdam for just a few trinkets. New Amsterdam is now known as Manhattan in New York city, and now has an estimated worth of a trillion dollars.
2) Our number two worst-ever business deal also involves "New Amsterdam." After purchasing the plot of land, the Dutch later traded it to Great Britain in exchange for the Republic of Suriname. By comparison, compared to Manhattan's current worth of $1 trillion, Suriname's gross domestic product is now an estimated $2.9 billion.
3) A couple centuries later, in 1803, Emperor Napoleon was trying to defend the New World conquests of France, one of which included Haiti. Haiti during this time was involved in a slave revolt. Because Napoleon was stretched thin, and he needed resources, he offered to sell the Louisiana Territory. This is despite that he had been offered the same sale for just the port of New Orleans. He sold the Louisiana Territory for what today would be around $284 million. Today's estimated value of the land, which includes parts of 15 different states and a couple of Canadian provinces, is about $750.
3) Let's talk about more contemporary times. The Ford Motor Company, in the mid 1950s, decided to create a new automobile to compete with General Motors' Oldsmobile. You probably know where this is headed. Their competitor was the Edsel, named after Henry Ford's son. Despite a tremendous amount of hype and advertising, the new car became one of the worst economic blunders ever in the automobile industry. Ford had sunk $350 in promoting the Edsel, and never came close to recovering that investment.
4) In 2000, the Internet giant formerly known as America Online (now AOL) got a bit big for its britches and bought Time-Warner for $164 billion. Under the merger structure, both original companies merged equally into the new entity entitled AOL-Time Warner.
AOL shareholders now owned 55 percent of the company, with Time Warner shareholders controlling the other 45 percent. Translation: The smaller company had bought the giant.
Following the merger, AOL's profitability plummeted. At the same time, the valuation of similar ISP's fell drastically, causing AOL's to drop as well. The result: a goodwill write-off, in which AOL Time Warner reported a $99 billion loss in 2002.
The company took out the ugly AOL from its name and got rid of Steve Case as chairman...and from then on, AOL remained a part of the Time Warner company--The parent had become the ugly step-child. And it's still struggling in vain to become profitable.
The moral of all of this for you: Get a good business valuation many years before you consider selling your business. You don't want to make it onto the next list.
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