The History of Avis

Wednesday’s NYT had an utterly hysterical tale of the history of the Avis saga, by Michael Kinsley. Here’s an excerpt:

"Since 1946, Avis has been sold or reorganized 17 or 18 times,
depending on how you count. Each time Avis changed hands or structure,
there have been fees for bankers and fees for lawyers, bonuses for the
top executives and theories about why this was exactly what the company
needed.

In 1972, ITT spun off Avis as a publicly traded company. Then, in
1977, the company was bought by another giant conglomerate, Norton
Simon. In 1983, a company called Esmark (formerly Swift & Co.)
bought Norton Simon.

In 1984, Esmark was bought by Beatrice Foods, and
in 1986, Beatrice was bought by the leveraged buyout firm Kohlberg
Kravis Roberts & Company. Kohlberg Kravis Roberts immediately sold Avis to an investment group
called Wesray. Wesray sold Avis’s fleet leasing business to a company
called PHH Group. Then it spun off Avis’s foreign operations and took
them public as a company called Avis Europe P.L.C. And then, in 1987,
Wesray sold Avis to its employees under an employee stock ownership
program. Wesray more than tripled its money in 14 months.

Two years after the stock ownership deal, the company sold General
Motors a complicated security that effectively gave it a 26 percent
stake in Avis. Apart from that, Avis’s employee ownership experiment
lasted nine years, until 1996, when Avis sold itself to a company
called HFS. Employees got an average of $26,000 each. Eighty or 90
current and former Avis executives got an average of $1.75 million
each.

A year later, in 1997, HFS took Avis public. (The initial public
offering raised just over $330 million. The banker Bear Stearns charged
$15 million for its services.) In 1999, Avis bought PHH. Remember PHH?
That was the company Avis sold its fleet leasing operation to in 1987.
PHH was owned by Cendant, a company that had been formed in 1997 by the
merger of HFS — right, the company that had spun off Avis in 1997 — and
another company called CUC. HFS had retained 19 percent of the
company’s stock when it took Avis public. With the stock portion of
Avis’s purchase price for PHH, Cendant now owned 34 percent of Avis…"

They try harder cause they have to!

>

Source:
We Try Harder (but What’s the Point?)
Michael Kinsley
NYTimes, May 16, 2007
http://www.nytimes.com/2007/05/16/opinion/16kinsley.html

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What's been said:

Discussions found on the web:
  1. Momo Fader commented on May 17

    I had such a terrible customer experience with Avis a little over 10 years ago that I still refuse to do business with them.

    I turned my rental over to valet parking in Atlanta, and the driver proceded to collide with a motorcycle … right in front of my eyes. I was automatically treated as guilty by Avis, and they did absolutely nothing to improve the situation (me being without a car). Despite my not being behind the wheel, and there being a police report, Avis hounded me for close to a year to try and collect on this. I had to fax reems and reems of documents and spend far more time than necessary dealing with the valet company. One lesson I learned was to always take full insurance when renting a car on the company dime.

  2. S commented on May 17

    Who’s on first?

  3. Ted Craig commented on May 17

    The pathetic part is this is all business as usual in the rental car business. All the big players have been bought and sold several times in the past few years. They’re car businesses, so they should be owned by the manufacturers (like Dollar-Thrifty or Hertz) or a company like AutoNation (Alamo-National)! No wait, they’re travel businesses, so they belong with other travel operations (like Avis-Budget)! No wait, they’re niche companies, they should be owned by private equity (everybody at some point)! Along the way, none of the owners seem to have found a way to make any money off rental car companies.

  4. Christopher Laudani commented on May 17

    This story makes me want to get an investor group together and make a run at the company. Can anyone recommend a good investment bank?

  5. Fred commented on May 17

    It’s all about churn, baby.

  6. V L commented on May 17

    Momo Fader,

    Approximately 10 years back, AVIS tried something similar with me. You cannot be nice with these people. You need to hit them back hard.

    I filed the official complaint with the Attorney General Office, served AVIS with a letter demanding them to compensate me, and stated my intentions to sue AVIS (for a judge to see that I had tried to resolve the issue without the courts first before actually brining the legal action)

    On the following day AVIS representative called me, and one day later, I received an apology letter and a check via FedEx overnight.
    They actually ended up paying me. (and no lawyers were involved).

  7. wunsacon commented on May 18

    Churn! Churn! Churn! That’s the hustle.

    If only those countless hours of “due diligence” during each transaction had been put to work on researching disease, alternative energy, lightweight materials, voting machine comparisons, sociology, history, or art, the people as a whole would have more to show for all their effort.

  8. D. commented on May 18

    I can’t count the number of restructurings I’ve had to endure. Of course all of them were 95% window dressing and didn’t work. The last 20 years have been littered with these. My personal experience makes it easy to believe that the only way we can improve our system is with a shock. When masses of people have nothing left to lose.

  9. Greg0658 commented on May 18

    hum ya … I agree we humans only learn by pain on the big issues

    need to feel reason to change course

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