In some frank remarks today, Fiat CEO Sergio Marchionne said he was shocked, when he came to Chrysler, by how little had been done the last two years to make the car company more competitive.
This really should be a total humiliation to former owners Cerberus, and it tells you everything you need to know about pre-bust private equity.
These firms love to tout how good they are at really reforming a company’s operations — Cerberus hired Bob Nardelli to run Chrysler because of its love of Six Sigma. But in the end, that’s total hogwash.
Even with an industry that was obviously in decline, the only thing they knew how to do was: apply leverage — > loot the company — > wait –> flip.
Figuring out how to make Chrysler a lean, competitive operation wasn’t the firm’s priority.
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