WHEN Irish bookmaker Paddy Power Betfair announced its takeover of daily fantasy sports business FanDuel in May it seemed like a great result for the firm’s five founders.
Though two - Lesley Eccles and Chris Stafford - had left the firm at least two years previously, the remaining three - Nigel Eccles, Tom Griffiths and Rob Jones - had been pushed out by FanDuel’s private equity backers after a planned merger with rival DraftKings fell apart last year.
With each retaining a shareholding, the sale would at least allow them to see some return for the time and effort they put into creating a business that completely changed the face of the US fantasy sports market.
Others who hoped to mimic their success stood to benefit too, with Mr Eccles saying after the deal was unveiled that he and his fellow founders would use the cash they received from the sale to help bolster the Scottish tech sector that has grown up in FanDuel’s wake.
They obviously didn’t reckon on FanDuel’s major shareholders - Kohlberg Kravis Roberts (KKR) and Shamrock Capital Advisors - flexing their private equity muscles, though.
In a move that seems extreme even by private equity’s notoriously ruthless standards, the firms have structured the deal in such a way that the people who created the business they are about to make a return on will receive nothing back themselves.
The name KKR has struck fear into the heart of many a business owner ever since it starred in the 1989 book Barbarians at the Gate.
FanDuel’s founders and staff have just found out why.
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