LLC’s

[Lisias]

Moderators note:   This topic was split off from:

 

 

On 7/25/2024 at 10:50 PM, Scarecrow71 said:

It is just sad that Take Two cares so little about the community that they can't even be bothered to talk to us about what happened...

Companies care about money. Communities are important while they help securing the income, and it's really simple like that.

We are an asset, and we need to learn how to cope with it.

This is not necessarily bad, besides uncomfortable - being a sentient asset have some advantages that can be beneficial to us if we learn to play the cards right.

Just remember: Companies are not people, they are made of people. Some are good, some are evil, most of them are somewhere in the middle.

We need to reach the good ones.

 

On 7/25/2024 at 10:50 PM, Scarecrow71 said:

but then turn around and make sure nobody else can either.

Standard INC procedure.

You know, LLCs have the upmost interest on knowing exactly what had gone wrong when a big project fails because the Company's owner ultimately have their skin on the game (pun not intended), there's no way out - they will pay for the failure directly from their pockets.

PLC and INC companies work different internally, the money's owners are an abstract mass of investors that are not directly dealing with the failure, only paying for it indirectly. So, whoever is in charge, have a special interest in hiding the problems that could tarnish their images and try to elect escape goats instead - and screw the aftermath, who cares if this is gong to be bad on the long run, these dudes only care about their image and how it affects their careers, and they have no problem on pursuing such career on the competition.

Edited July 29 by Gargamel
Added link

[SmokerCraft]

On 7/26/2024 at 4:21 AM, Lisias said:

Standard INC procedure.

You know, LLCs have the upmost interest on knowing exactly what had gone wrong when a big project fails because the Company's owner ultimately have their skin on the game (pun not intended), there's no way out - they will pay for the failure directly from their pockets.

PLC and INC companies work different internally, the money's owners are an abstract mass of investors that are not directly dealing with the failure, only paying for it indirectly. So, whoever is in charge, have a special interest in hiding the problems that could tarnish their images and try to elect escape goats instead - and screw the aftermath, who cares if this is gong to be bad on the long run, these dudes only care about their image and how it affects their careers, and they have no problem on pursuing such career on the competition.

Thats literally the opposite of how LLCs work. Its in the name. Limited Liability Company. 

As an owner, as long as you dont mix your personal assets with your LLC assets, your liability is limited to your LLC assets. You have zero personal "skin in the game". The same is true for Inc companies. Liability is limited to your investment in the company.

In either case, LLC, or Inc, those companies can be publically traded.

Company founders arent going to lose their house over a failed project as much as you might like that to be true.

[Lisias]

17 minutes ago, SmokerCraft said:

Thats literally the opposite of how LLCs work. Its in the name. Limited Liability Company.

Limited Liability protects the owner's personal assets from the company, granted.

But the company needs to have a thingy called share capital ("capital social" in pt-br), being it the max liability the LLC is responsible for.

hint: the company's owner needs to foot the share capital - so, if the worst happens, they just lose that money.

Now, it's up to the clients to decide to do business to such LLC, right?

Would you contract a LLC for a job of 1M USD when the share capital of that company is 100K USD? Well, I would not - neither anyone that know how to do business.

So, and still, the LLC owners have their skin on the game - they need to foot the share capital of the LLC, and they are risking lose that money if the company goes kaput.

 

[SmokerCraft]

11 hours ago, Lisias said:

But the company needs to have a thingy called share capital ("capital social" in pt-br), being it the max liability the LLC is responsible for.

Maybe its different where you live, but in the US, share capital means something different. And its not required.

11 hours ago, Lisias said:

hint: the company's owner needs to foot the share capital - so, if the worst happens, they just lose that money.

In the US, you can get business loans, grants, crowdsource, etc. initial funding for an LLC. It doesnt have to come from the "owner".

11 hours ago, Lisias said:

Now, it's up to the clients to decide to do business to such LLC, right?

Would you contract a LLC for a job of 1M USD when the share capital of that company is 100K USD? Well, I would not - neither anyone that know how to do business.

It depends on what the rest of the balance sheet looks like. If the company has issued 100k of share capital, but has 300 million of cash on hand and 2 billion in equity / net assets, why would 100k of share capital scare you off from a 1M USD contract?

11 hours ago, Lisias said:

So, and still, the LLC owners have their skin on the game - they need to foot the share capital of the LLC, and they are risking lose that money if the company goes kaput.

 

Unless they funded the LLC with a business loan, or to your point above, issued stock for a share of the company to another investor. In either case their are options for the "owner" in the even the company goes kaput. Options that prevent the "owner" from losing their personal assets. In the US anyway. Maybe its different where you live.

Edited July 28 by SmokerCraft

[Lisias]

34 minutes ago, SmokerCraft said:

It depends on what the rest of the balance sheet looks like. If the company has issued 100k of share capital, but has 300 million of cash on hand and 2 billion in equity / net assets, why would 100k of share capital scare you off from a 1M USD contract?

Because the contractor's liability is limited to 100K! So if the contractor screws up the job, you will lose 900K USD because their liability is only 100K.

That's the very purpose of the LLC!

Now it's up to you to take the risk or not.

 

37 minutes ago, SmokerCraft said:

Unless they funded the LLC with a business loan, or to your point above, issued stock for a share of the company to another investor. In either case their are options for the "owner" in the even the company goes kaput. Options that prevent the "owner" from losing their personal assets. In the US anyway. Maybe its different where you live.

I'm losing you.

I found this: https://www.doola.com/blog/llc-liability-protection/

Can you explain to me if this link is correct? Because if it is, it's exactly how Sociedade Limitada (LTDA) works here on Brazil - but with a catch, frauds and crimes (mostly fiscal) "breaks" the limitation and can reach your personal assets, and the link above appears to say the same for LLC.

[SmokerCraft]

9 hours ago, Lisias said:

Because the contractor's liability is limited to 100K! So if the contractor screws up the job, you will lose 900K USD because their liability is only 100K.

Thats not how 'share capital' works. Or business contracts. That 100k you're referring to, that the 'owner' initially invested into the company, is probably gone. It would not be paid out to another company in the event of a failed project. That 100k investment was used to fund operations or other capital projects to get the business off the ground. The company could be worth 10 trillion dollars 10 years later and still carry the original 100k share capital investment the owner made 10 years ago on its books depending on how the investment was made, i.e. a personal loan to the company. The company could have $50 million in cash on the books to pay the costs of the failed $1M project, and also a 10 year old 100k liability from an original investment from the owner. Share Capital is one tiny piece of a balance sheet. It is not a company's only liabilty or asset.

Also - the company has other protections like insurance - depending on the nature of the $1M project failure.

Also - the owner doesnt have to make the original 100k investment - they could have gotten that money from a business loan - and if the business goes birds up the company could declare bankruptcy. No harm no foul to the owner. Personal assets are un touched.

9 hours ago, Lisias said:

That's the very purpose of the LLC!

Now it's up to you to take the risk or not.

 

I'm losing you.

I found this: https://www.doola.com/blog/llc-liability-protection/

Can you explain to me if this link is correct? Because if it is, it's exactly how Sociedade Limitada (LTDA) works here on Brazil - but with a catch, frauds and crimes (mostly fiscal) "breaks" the limitation and can reach your personal assets, and the link above appears to say the same for LLC.

Yup that article does a good job explaining how an LLC works. "Piercing the corporate veil" is a legal term used when courts have already determined a company to have abused a corporate structure to commit a crime / harm others. Its rarely used by courts because companies dont typically go out of their way to commit crimes. And most companies go out of their way to not comingle personal and business assets and finaces. If a company is found guilty of a crime, but business assets and finances are separate from owners/officers/shareholders personal assets - no "piercing the corporate veil". Both conditions have to be true, along with a couple other conditons. Its very rare.

Long story short, and back to my original point - an LLC is designed to protect an owner from company liabities like debt incurred from screwing up a $1M project. The owner is very likely to have zero "skin in the game", as you claimed. No more so than any other business owner. An LLC business owner is no more likely to care about why a project failed than an incorporated business owner. Or a non profit business owner. Or an owner of a 10 billion dollar publically traded company. They all have an interest in knowing why a project failed, but how they registered their business with their state isnt a consideration in that.

Edited July 28 by SmokerCraft

[Skorj]

As someone who identifies as an LLC (Skorj has his own address and phone number, even), let me see if I can explain this better.  There's no major difference between an LLC partnership and a closely-held corporation (where the shareholders know each other).  The devil is in the details, but the risk is about the same.  Everything you put into the business is at risk,and that's a lot, but you have some protection for other businesses and personal assets.  There's a big difference is between that, where you both own and manage the company, and big (especially publicly held) corps where the owners and managers are different groups of people.  (Founder led public corps tend to split the difference.)

Bringing this long tangent back around to the topic: owner-run companies tend to have some vision beyond short-term profit maximization, some product they want to sell, some long-term plan, and always an eye for actually making money over the mere appearance of such.  The KSP IP might be in good hands with such, and if it wasn't working out they'd be well motivated to either end it gracefully in a reputation-preserving way, or sell it at the best price they could reasonably get.  A detailed post-mortem would be both a learning experience and a chance to show the sort of transparency gamers appreciate. 

But instead it's managed by people looking after their own careers first and foremost, with minimal concern for investors and none at all for reputation with gamers.  From their point of view, the primary goal with KSP is to be able to remove any association with it from their resume, problem solved.  Any future involvement would be a career risk, even to be part of selling it (unless for an outrageous amount).

It's a sad situation, but it's an imperfect world.

[SmokerCraft]

Saying privately held companies typically have long term visions beyond short term profits while publically traded companies dont is a huge generalization and not accurate. Its not factual. At all.

 

Do you think Nvidia just stumbles across the next nanometer generation in chips? It takes years and decades of planning to go from 14nm to single digit nm architecture. Do you think Boeing comes up with a 787 Dreamliner through serindipity? It takes decades. Those decades long projects are laid out in an ever changing plan that protects investors - their shareholders.

 

Buying a game from T2 does not make you an investor. It makss you a customer. Buying 50k in T2 shares makes you an investor. As an investor you wouldnt want T2 wasting your money on a KSP2 project that burned through tens of millions of dollars with almost nothing to show for it. As a customer, you're butt hurt. T2 isnt protecting you the customer, theyre protecting people that own shares in the company and expect a return on that investment.

[Lisias]

57 minutes ago, SmokerCraft said:

Do you think Boeing comes up with a 787 Dreamliner through serindipity?

Do you think 737MAX was plain bad luck?

[SmokerCraft]

.... what?

Edited July 28 by SmokerCraft

[Skorj]

One can play example-vs-counter-example all day, but the trend is clear: Pournelle's Iron Law of Bureaucracy holds.  Short term thinking and career-over-mission is the "lowest energy state" of any organization (commercial or otherwise), and the larger the org, the greater the energy gap.  Entropy always wins in the end.  Owner-run businesses (or other orgs) align career with mission, and so avoid that particular trap until sold or handed over.  This is particularly stark in gaming: has any small studio survived for long making quality games after being AAAcquired? 

7 hours ago, SmokerCraft said:

Buying a game from T2 does not make you an investor. It makss you a customer. Buying 50k in T2 shares makes you an investor. As an investor you wouldnt want T2 wasting your money on a KSP2 project that burned through tens of millions of dollars with almost nothing to show for it. As a customer, you're butt hurt. T2 isnt protecting you the customer, theyre protecting people that own shares in the company and expect a return on that investment.

I'm sure I own a few shares of TTWO indirectly, and with my investor hat on: if the leaks are true, T2's meddling with ST/IG was a nightmare of stupidity and short-term greed.  Not saying ST/IG is blameless here, they had lots of room to do better, but the restrictions they (T2) imposed sabotaged the project from the start.  Even with that, T2 should have seen how badly the KSP2 project was going long before 2023 and changed course, but that might have involved T2 manages admitting they had made a mistake, so evidently not.  Epic mismanagement. Selling PD is the right thing to do, as they clearly don't know how to manage small studios, but they're not even serious about that.

With my gamer hat on: T2's behavior is exactly what one expects from AAA filth.  I bought into the lie that PD was a hands-off department of T2.  A small publisher for small games.  That's on me for being so easily fooled, but it's hard to let go of once-loved franchises.

Edited July 29 by Skorj

[DDE]

On 7/28/2024 at 8:06 AM, SmokerCraft said:

Maybe its different where you live

Just skimming over this discussion, yes, one should be very cautious between comparing Anglo-American LLCs and the similarly named continental Gmbh et cetera (and their derivatives, e.g. the post-Soviet OOO/TOO is very much a Gmbh). Gmbh is just AG without the transferable shares, while LLC is... more of a surrogate than a real, legally distinct corporation.

[SmokerCraft]

20 hours ago, DDE said:

Just skimming over this discussion, yes, one should be very cautious between comparing Anglo-American LLCs and the similarly named continental Gmbh et cetera (and their derivatives, e.g. the post-Soviet OOO/TOO is very much a Gmbh). Gmbh is just AG without the transferable shares, while LLC is... more of a surrogate than a real, legally distinct corporation.

OK

[Lisias]

Well... There's at least one positive point in favor our LLCs by now...

CrowdStrike sued by shareholders over global outage

https://www.bbc.com/news/articles/cy08ljxndr4o

On a LLC, there're way less people going to sue you, at very least.

If this trend catches on and reaches the gaming industry, some interesting things are going to happen...

[PDCWolf]

1 hour ago, Lisias said:

If this trend catches on and reaches the gaming industry, some interesting things are going to happen...

Contrary to tech oriented VC, gaming companies aren't always acquired by holding groups just as a way to maximize income. The process normally entails buying the majority of shares, injecting ESG-farming narratives into the products, they use that to pass yearly ESG evaluations and/or ESG investment rounds. Then the games come out, and nobody wants yet another mediocre, preachy piece, so it flops. After, holding groups just sell the stock away to recoup cost and let whoever's next take the fall, which has ended in record layoff numbers in 2022, '23, and now little after half of '24, a bigger number of layoffs than '23, just from studios falling like flies. From the side of the holding group, they got to pass the score at a minimum cost, or even got money from ESG oriented investment rounds and policies, so from they side it's still profit even if the game flops.

I don't see shareholders in holding groups suing gaming companies any time soon, because that's simply not why they acquire them most of the time.

[Lisias]

13 minutes ago, PDCWolf said:

I don't see shareholders in holding groups suing gaming companies any time soon, because that's simply not why they acquire them most of the time.

Given the current trending, sooner there will be no gaming companies to be sued at first place...

[Fizzlebop Smith]

On 7/27/2024 at 10:47 PM, Lisias said:

Because the contractor's liability is limited to 100K! So if the contractor screws up the job, you will lose 900K USD because their liability is only 100K.

That's the very purpose of the LLC!

Now it's up to you to take the risk or not.

 

I'm losing you.

I found this: https://www.doola.com/blog/llc-liability-protection/

Can you explain to me if this link is correct? Because if it is, it's exactly how Sociedade Limitada (LTDA) works here on Brazil - but with a catch, frauds and crimes (mostly fiscal) "breaks" the limitation and can reach your personal assets, and the link above appears to say the same for LLC.

This last part, where malfeasance on behalf of the company can void those tructural systems people abuse elsewhere is a beautiful thing.

If you steal 1000$ you are a felon

If you steal $100,000 you are a savvy business person

Edited August 1 by Fizzlebop Smith

[DDE]

4 hours ago, PDCWolf said:

Contrary to tech oriented VC, gaming companies aren't always acquired by holding groups just as a way to maximize income. The process normally entails buying the majority of shares, injecting ESG-farming narratives into the products, they use that to pass yearly ESG evaluations and/or ESG investment rounds. Then the games come out, and nobody wants yet another mediocre, preachy piece, so it flops. After, holding groups just sell the stock away to recoup cost and let whoever's next take the fall, which has ended in record layoff numbers in 2022, '23, and now little after half of '24, a bigger number of layoffs than '23, just from studios falling like flies. From the side of the holding group, they got to pass the score at a minimum cost, or even got money from ESG oriented investment rounds and policies, so from they side it's still profit even if the game flops.

I don't see shareholders in holding groups suing gaming companies any time soon, because that's simply not why they acquire them most of the time.

Ah, the three-letter word. I actually worked on the topic from a bank's risk management perspective - since I dropped my doxx here years ago by rushing to get published by Atomic Rockets, let's go ahead all the way and say I contributed considerably to writing the sustainability strategy of a top-3 Russian bank.

Taking a few more steps back to get the whole picture, the whole idea was that ESG investments were more profitable in the long run (sustainable) as "brown" industries would face greater regulatory pressure, get shut down by law or "stranded" - the so-called green premium (greenium). This created an artificial demand for, ahem, green-lit investments (and assorted green-lighting services like ESG ratings and consultancies), which in the short term created a deficit of ESG-compliant investments and allowed them to attract financing at a lower cost - the real greenium. Hence the rush to "greenwash" everything. The gaming industry seems to have been quite behind everyone else to get on the bandwagon, really, especially since everything began with "Environmental" and what games can do generally involves "Social" that came along later.

Everyone seems to have spent much of 2023 burying ESG. Part of this is because American right-wingers have began targeting it - Larry Fink said this explicitly. But part of this is also because the expected greenium has failed to materialize, like, at all. This was all marketing all along.

I would also caution against attributing this trend to ESG alone. For example, there is a very interesting corporate drama surrounding the American/Cypriot/Kazakh (but actually Russian, hiding behind the face and CV of Tim Willits) developers of Wh40: Space Marine 2 and Jurassic Park: Survival as well as major contractors for ports of Halo, Cyberpunk and Witcher. They've scooped up 25 (!) other, smaller studios like 4A Games (Metro) to puff themselves up for Swedish investors (Embracer Group, 129 studios) in a scheme that could involve billions.

https://ixbt-games.translate.goog/results/2023/12/10/rassledovanie-saber-interactive-na-grani-propasti.html?ysclid=lzbtlhfgel298385725&_x_tr_sl=auto&_x_tr_tl=ru&_x_tr_hl=ru&_x_tr_pto=wapp

Basically we may be at the tail end of a cycle of attempted pump and dump schemes concerning multi-studio holding groups, with many, many studios never having been viable in the first place. No ESG involved.

[PDCWolf]

52 minutes ago, DDE said:

Ah, the three-letter word. I actually worked on the topic from a bank's risk management perspective - since I dropped my doxx here years ago by rushing to get published by Atomic Rockets, let's go ahead all the way and say I contributed considerably to writing the sustainability strategy of a top-3 Russian bank.

Taking a few more steps back to get the whole picture, the whole idea was that ESG investments were more profitable in the long run (sustainable) as "brown" industries would face greater regulatory pressure, get shut down by law or "stranded" - the so-called green premium (greenium). This created an artificial demand for, ahem, green-lit investments (and assorted green-lighting services like ESG ratings and consultancies), which in the short term created a deficit of ESG-compliant investments and allowed them to attract financing at a lower cost - the real greenium. Hence the rush to "greenwash" everything. The gaming industry seems to have been quite behind everyone else to get on the bandwagon, really, especially since everything began with "Environmental" and what games can do generally involves "Social" that came along later.

Everyone seems to have spent much of 2023 burying ESG. Part of this is because American right-wingers have began targeting it - Larry Fink said this explicitly. But part of this is also because the expected greenium has failed to materialize, like, at all. This was all marketing all along.

I would also caution against attributing this trend to ESG alone. For example, there is a very interesting corporate drama surrounding the American/Cypriot/Kazakh (but actually Russian, hiding behind the face and CV of Tim Willits) developers of Wh40: Space Marine 2 and Jurassic Park: Survival as well as major contractors for ports of Halo, Cyberpunk and Witcher. They've scooped up 25 (!) other, smaller studios like 4A Games (Metro) to puff themselves up for Swedish investors (Embracer Group, 129 studios) in a scheme that could involve billions.

https://ixbt-games.translate.goog/results/2023/12/10/rassledovanie-saber-interactive-na-grani-propasti.html?ysclid=lzbtlhfgel298385725&_x_tr_sl=auto&_x_tr_tl=ru&_x_tr_hl=ru&_x_tr_pto=wapp

Basically we may be at the tail end of a cycle of attempted pump and dump schemes concerning multi-studio holding groups, with many, many studios never having been viable in the first place. No ESG involved.

Oh I by no means claim ESG farming is the only process ensh-ttifying gaming right now, not by a looooooooong shot. I went there because that's what I believe is one of the main reasons we won't see shareholders (holding companies) sueing the game studios they themselves buy the stock off to ensh-ttify.

And yes, I know it's going away now, but do remember that making games takes time. The games that have come out in the last 3 years are the result of processes that started anywhere from 10 to 7 years ago, during which the whole Embracer fiasco (and other copycats!) you mention happened and exploded, amongst many other stuff. These last years have also been the period where the games proposed or storyboarded in a way reactionary to the original gamergate have been released.

Greenium has materialized in deals solidified in the shape of government grants, tax credits, "carbon offset" and many other scams, it's just not really a great revolution towards green energy as they sold us, but their pockets did go through a great revolution towards being ahead of the curve as energy generation expands to post-oil territories.

[Lisias]

Guys... I have a interesting question about Companies acquiring Companies.

In an Incorporated buys a LLC, then strip it out selling or internalizing the assets, and then liquidated it... If that LLC had some royalty, patent or copyright infringement pending to be filed by the offended...

Who will inherit the lemon?I doubt that any transgression would just be cease to be prosecutable by acquiring and liquidating the offending LLC...

If the company being bought is another INC, there's a difference?