A profitable little doughnut store gets taken over by a loss-making one. The latter is owned by an oligarch’s trophy wife.
Donut Library is a small chain of doughnut shops in Budapest. Since its funding in 2013 The Donut Library Kft. has been growing every year. From 25 million forints in 2013, its revenues grew to 137 million by 2017. Yet, its owners “didn’t wish to run it any longer” according to the Facebook update this week, announcing the sale of the company to Mr. Funk Kft., the business of an oligarch’s trophy wife.
Instagrammable doughnuts might not be as sound a business model in Budapest as Donut Library made it look like. Its competitor, Mr. Funk, couldn’t repeat its success – despite its powerful political backing. Mr. Funk opened in 2016 with much pomp and circumstance with celebrities attending the opening show. Not surprisingly. The husband of the owner is a major beneficiary of Orbán’s system. He received exclusive gambling license in the whole country, but he also runs film financing – doling out earmarked corporate income tax revenues to foreign and Hungarian productions.
But Mr. Funk Kft., the business of the young trophy wife, didn’t make a profit comparable that of its market-based competitor, Donut Library. In fact, Mr. Funk made a loss every year, so she started looking at the competition. And in good Fidesz manner she bought it up.
Hostile takeovers and forced buyouts are the modus operandi of Orbán’s cronies and front men. And trust me, once a crony announced his desire for your business, you no longer “want to run it”. They have the entire legal machinery of parliament backing them up. And if you think that such a takeover would trigger outrage and empathy, try to explain what happened to you in roundabout legal, tax, and regulatory ways – and see how long before your audience falls asleep. The state capture machinery is coordinated, well-oiled, and completely legal. Because when one clan takes over the state machinery, their actions become legal.
Some people try to soothe themselves (and their consciousness) by thinking that it can only happen to nasty, big companies, who did something fishy anyway. Firstly: if it happened only to them, it would be bad enough to spark outrage. But it doesn’t. You tiny little business can become a target of a tiny little apparatchik any moment.
When even a small doughnut chain gets taken over so blatantly, there is officially no business small enough to be safe. Those to whom it had already happened know it. Don’t wait until it happens to you to get angry.
What are people thinking, anyway? That Fidesz’ business steamroller stops just before it hits them? In which universe is that logical? Why would a steamroller stop just when it overcame all bigger obstacles? In fact, it only gets faster and less inhibited as it grows more powerful. There won’t be any consolidation – economic or otherwise – regimes like this cannot stop expanding.
You might have hoped that politics stays out of you if you stay out of politics, but the economic pond is way too shallow for that.
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