Case Marvel

Marvel, a comic book company, was founded in 1939 by Martin Goodman. Thanks to the creation of a number of superheroes starting with Captain America and containing the Incredible Hulk and Spider Man, Marvel became a successful company within the comic book business. In 1989, Marvel was bought by Ron Perelman, an investor with a reputation of buying and reviving underperforming companies, for the amount of $82.5 million. Under Perelman’s control, net income increased from $2.4 million to $5.4 million the year after buying the company.

Perelman’s strategy was to build a diversified youth entertainment company, using the comic book business as a foundation. He first strengthened and smoothened the company to lower expenses. Perelman also acquired Fleer, a large manufacturer of sports and entertainment trading cards, Panini Group, an Italian producer of sports and entertainment stickers, and a minority position in Toy Biz, a designer and retailer of children’s toys. But while diversifying, Perelman was also attempting to consolidate the comic book industry by acquiring four other comic book publishers. To achieve higher margins in it’s business, Marvel changed its distribution strategy to concentrate on comic book specialty stores instead of concentrating on subscribers or on the traditional mainstream retailers. This also resulted in higher margins, as well as final (guaranteed) sales.

By 1996, Perelman owned 78.8% of Marvel through his holding companies. These are Marvel Holdings Inc., Marvel Parent Holdings Inc., Marvel III Holdings Inc., Andrews Group Inc., Mac Andres & Forbes Holdings Inc. and Mafco Holdings Inc, and are all fully owned by Perelman.

Unfortunately, in the 90s, Marvel’s core businesses began to falter because of declining sales. Bad strategy resulted in disappointed collectors of comic books, who saw buying comic books as an investment. But the returns on these investments declined due to the number of monthly titles by Marvel. Speculators,...