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Instead, they took the entire company into private and finally plunged in weighty debt it had taken on for the buyout.
By 1988, Payless had become an attractive takeover target as every corner of the enterprise suffered extreme economic crisis. There was a considerable decline in its stock price, sales, and profit. In fact, the vulnerability has to be attributed to organizational mismanagement especially the leaseback arrangements, and inappropriate business expansion.
As the Payless’ effort to expand its stores failed due to buyout debt, by 1993 the company went public again raising stock offering that could cut down the debt to a considerable range. However, it was of comparatively less hope for Payless had to undertake further challenges by promoting new marketing strategies. The ‘dual path strategy’ it initiated intended a shift in customer focus from the conventional style of single type customer to ‘do-it-yourself markets’. However, the effort did not attain goal as it raised negative response from both industry observers and fund providers. For instance, when it approached banks for negotiation of debts, they suggested that company must file Chapter 11 bankruptcy for renegotiation.
Although Sutherland wanted to takeover at least some parts of the Payless, the management did not favor the Sutherland bid. Stanley and his group did not want to reveal the actual condition of the company; and moreover, they thought of taking the entire part of the firm into private somehow by planning leveraged buyout. In addition, Sutherland was the notable long term competitor of Payless.
Management led takeover was also destined to fail as it had surpassed the possible range of an economic recovery that an organization itself can ever attain. Although several attempts had been made by Barron and his crew to renovate the firm by raising fund from ...Show more


What do you believe was the main reasons for the Payless failure? Why? The failure story of Payless begins in 1980 as Stanley became its president as well as major influence on company’s decision making process. Since Stanley was new to the organization, he had too…
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