Typical of a PE firm, Terra Firma used debt financing to acquire EMI in a $4.7 billion deal, with the intent of extracting value by selling off its revenue streams to investors. However, the then roiling financial crisis limited any potential buyers. Terra Firma then opted for dramatic restructuring: it fired the existing management and two thousand employees (45 percent of the workforce), while relentlessly focusing on maximizing profits and minimizing losses. Its strategy was characterized as seeking to “disempower the irresponsible 'creatives', and impose financial discipline.” Many of those so-called irresponsible creatives decided to take their business elsewhere, including Paul McCartney, the Rolling Stones, Robbie Williams, and Radiohead. Unable to restore revenues in an industry struggling with the digital transition and unable to make payments on its loans, Terra Firma forfeited control of EMI to its primary lender, Citigroup, in 2011. Its losses on the investment totaled $2.7 billion, considered the largest known PE investment write-off in history.

XREF: Connects to broader patterns of private-equity buyout failures during the 2008 financial crisis.

Andrew deWaard, Derivative Media, loc. 192