Books and Mortar

News in Australia, is that the last handful of Borders bookstores are closing their doors in two weeks. Borders is a relatively new player in the retail scene, bringing a war chest for expansion with giant retail outlets Australia wide. They started here with a three stories tall flagship store here in Brisbane city, a stones-throw from the central mall.

No its not exactly a secret that book retail is a tough market, the cheaper, online giant, Amazon has and increasing slice of the bookworm pie. But thats not entirely the reason Borders went belly up. You see Borders and Angus Robertson the other big book retail outlet, were both owned by REDGroup.

REDGroup was not a book seller, it was a private equity firm. AKA investors, with an all too common business model.

1. Raise a whole lot of money through debt markets
2. Buy majority stake in some well respected brand name 
3. If there is still debt left over, aggressively grow that business and attempt be the dominant player
4. Transfer all that debt on to the balance sheets of these trading entities.
5. Hope these businesses can grow ahead of that crippling debt.

Well the GFC brought these business practices into the limelight, but dominoes continue to fall.