Embracer Group Restructuring settles Asmodee with huge debt

This sounds like shit news. As much as I dislike Asmodee as a company this will only make things worse with how they operate.

The fine print somewhere in there says they are taking on a 900 million loan that is helping refinance the pc gaming divisions or so. This is to be repaid in about a year. Sounds like they are being set up for failure.

Any of you a finance guru who can explain the mess?

Mostly I care about what is going to happen to BGA. And to all the smaller studios that still make good games. And all the people working for them.


Oof. “This is the debt, and it’s ring-fenced so that only Asmodee is liable for it” sounds pretty conclusive.


Reminds me of what happened to Toys “R” Us, and lots of other businesses. Private equity firm purchases a business by borrowing money, then forces the purchased business to cover the repayment of the loan, while at the same time trying to make enough to keep the business itself afloat. Company forced into bankruptcy a few years down the road.


Absurd vulture capitalism given that Asmodee could easily trundle along making money. This is going to hit retailers hard- Asmodee have exclusive distribution rights to a lot of top hitters, and control a lot of distribution in certain places (I’m a tiny, tiny indie publisher, and they’ve even got distribution rights to my games) so expect to see price increases at all points in the system. If this does lead to price increases it could see crowdfunding benefit considerably.


Price increases are one thing.

If they somehow do the Toys‘R‘Us, the rights to many games could end up in limbo for years…

… on that note: a some of the German publishing rights for the big games they publish in English remain with the local non Asmodee publishers. F.e. Carcassonne is still Hans im Glück here. Catan is still KOSMOS.

I admit I just went over to Wikipedia to get a list of the studios that are part of Asmodee directly to see what will be affected—because I‘ve never been able to remember which Studios and games are theirs.

And yes they have huge influence as a distributor and it will hit retailers hard. I think my FLGS hates them already for their current practices and I am sure to hear a lot more griping the next time I visit.

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Not a finance person, but no one I’ve seen online is saying this is good.

Loading up the only profitable part with debt (presumably the only part they can get a loan on) to keep the other bits afloat. Ouch.

Gamings gonna get pricey.

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there’s literally a paragraph in there saying how they expect Asmodee to squeeze all their assets hard.

I am expecting BGA to become way more expensive and restrictive.

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I read it earlier and didn’t read it again before posting, so forgot they said that.

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Not happy making news most definitely. Someone tell me to get a grip on the wave of Fomo I am experiencing before I go and buy a bunch of Uwe games from Lookout Games :disappointed:

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Which they’ve been doing a bit already to get the rate of return up, pushing the licences that have a built in will-buy-anything fan base over any sort of innovation, but yeah, think of the way your favourite free web service* has turned to crap over the last year or tw,o and more of the same.

* Other than this place, which is financed by your generosity and my deep pockets. Yes, I know I haven’t been updating finances lately, sorry!

Well played to Plaid Hat for managing to buy themselves out of the Asmolith in time.

(I am an ecnomics/finance person at least according to my degree, and I agree with everyone else: this is what private equity funds in particular do. The broader reason why this sort of thing is happening all over the place is that US interest rates have been functionally zero for a few years and now they’re not, so there’s no more free money to make your balance sheet look good, but the investors are still demanding dividends and infinite share price rises so you have to burn the furniture for short-term profit.)


I don’t know anything about Embracer’s balance sheets, structure, or governance – just what is in the linked article and another one I saw linked to elsewhere. But there are clearly a bunch of not really related businesses in Embracer, and that does make it harder for a company to raise capital and borrow money. Splitting them into related groups makes sense for a bunch of reasons. Not knowing anything about the blance sheets, I have no idea if the debt asmodee ends up with is reasonable (it is debt that was already incurred by the bits going into the new company) or not (it’s the video game debt). It’s not at all unusual for a going concern to have that much debt (not good, really, but not, unusual), and the term isn’t terribly weird either – if you think interest rates are going to go down (and there are plenty of people who think that), short term you can a somewhat lower interest rate, and in a year, you refinance at lower future rates. No one thinks the capital of that loan will be paid back in 18 months, it’s going to be rolled into something else, either another bank loan, a bond issuance, etc. I don’t know if this is furniture burning or not, and frankly, I haven’t seen anyone who has looked at the financials (they’re publically traded, there should be enough information to have an educated opinion) express an opinion one way or the other.

But yes, price increases are likely (the press release says that, in corporate bullshit talk). And stuff they don’t think they make enough money on will go unavailable. (and screw the IP owners, if they don’t have a way to claw distribution back and give it to someone who wants to actually, you know, sell games.)


There’s a thread over on EnWorld with some details. I summarised them as:

The original owners of Asmodee wanted to retire, and sold the company to Eurazeo in 2014 … The selling price was $143 million.
In 2018, Asmodee, nee Eurazeo, sold itself to a French private equity form called PAI Partners, for $1,200 million.
PAI Partners, as the owners of Asmodee, looked at what they had with Asmodee, and started looking for a buyer in late 2019. Then 2020 happened. It took 2.5 years for them to get bought by Embracer; they sold to Embracer for $2,750 million.

So the original owners sold it for something like what it was worth. Then the new owners managed to sell it for far more, and the next set of owners did the same. Looks like the value of the business has been wildly inflated by people who think “private equity” means “we can print money” and the final set of owners are trying to get blood out of stones.


Any time I see something like this, I conclude that I don’t understand how money works at all.


It might not be you. :melting_face:


Essentially the idea of this kind of purchase is to

  1. Find an ‘undervalued’ company
  2. Raise merry hell capital through taking on debt or angel investors
  3. Strip the business/raise prices for profits
  4. Sell onto the next investor for a profit as the profit/loss statement looks good and pay back the debt used/investor plus some. Hopefully you also walk away with some money.
    4a. When 4 fails, put the debt into the profitable bits of the business to pay it down.

Embracer failed on step 1 here as the business was inflated in value.

If I’m wrong, then I also don’t understand money.

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This helpful video will explain it all.


Bear in mind that a crucial part of most confidence tricks is convincing you that it does make sense really, you’re just not smart enough to get it. (Cryptocurrency, NFTs, DeFi, etc., turn this up to 11.)


Thank you, this explanation makes perfect sense to me.