In the Movies, They Call This a Bust Out

A look out how our Galtian hero Mitt Romney runs his business:

Thanks to leverage, 10 of roughly 67 major deals by Bain Capital during Romney’s watch produced about 70 percent of the firm’s profits. Four of those 10 deals, as well as others, later wound up in bankruptcy. It’s worth examining some of them to understand Romney’s investment style at Bain Capital.

In 1986, in one of its earliest deals, Bain Capital acquired Accuride Corp., a manufacturer of aluminum truck wheels. The purchase was 97.5 percent financed by debt, a high level of leverage under any circumstances. It was especially burdensome for a company that was exposed to aluminum-price volatility and cyclical automotive production.

Forty-to-one leverage is casino capitalism that hugely magnifies gains and losses. Bain Capital wisely chose to flip the company fast: After 18 months, it sold Accuride, converting its $2.6 million sliver of equity into a $61 million capital gain. That deal, which yielded a 1,123 percent annualized return, was critical to Bain Capital’s early success and led the firm to keep maximizing the use of leverage.

In 1992, Bain Capital bought American Pad & Paper by financing 87 percent of the purchase price. In the next three years, Ampad borrowed to make acquisitions, repay existing debt and pay Bain Capital and its investors $60 million in dividends.

As a result, the company’s debt swelled from $11 million in 1993 to $444 million by 1995. The $14 million in annual interest expense on this debt dwarfed the company’s $4.7 million operating cash flow. The proceeds of an initial public offering in July 1996 were used to pay Bain Capital $48 million for part of its stake and to reduce the company’s debt to $270 million.

From 1993 to 1999, Bain Capital charged Ampad about $18 million in various fees. By 1999, the company’s debt was back up to $400 million. Unable to pay the interest costs and drained of cash paid to Bain Capital in fees and dividends, Ampad filed for bankruptcy the following year. Senior secured lenders got less than 50 cents on the dollar, unsecured lenders received two- tenths of a cent on the dollar, and several hundred jobs were lost. Bain Capital had reaped capital gains of $107 million on its $5.1 million investment.

Bain Capital’s acquisition in 1994 of Dade International, a supplier of in-vitro diagnostic products, was 81 percent financed by debt. Of the $85 million in equity, about $27 million came from Bain with the rest coming from a group of investors that included Goldman Sachs Group Inc.

From 1995 to 1999, Bain Capital tripled Dade’s debt from about $300 million to $902 million. Some of the debt was used to pay for acquisitions of DuPont Co.’s in-vitro diagnostics division in May 1996 and Behring Diagnostics, a German medical- testing company, in 1997. But some was used to finance a repurchase of half of Bain Capital’s equity for $242 million — more than eight times its investment — and to pay its investors almost $100 million in fees.

I don’t know about you, but I saw this movie before:

Tell me how what they did is any different from Paulie’s bust-out of the Bamboo Lounge?

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137 replies
  1. 1
    Thoughtcrime says:

    Paulie went to prison.

  2. 2
    Chris says:

    Mafia families can get politicians to look the other way when they break the law. Big corporations like Bain can get them to write laws on their behalf so they don’t even have to. Only difference I can see.

  3. 3
    waynski says:

    Thanks for posting the Goodfellas clip. I’ve been making the same comparison to friends for months. The only difference is what Romney did was legalized extortion.

  4. 4

    ICYMI – Mother Jones has a handy dandy Bain timeline out.

    http://www.motherjones.com/moj.....Jones.com+|+MoJoBlog%29

  5. 5
    John PM says:

    Yeah, but everyone knows that Bloomberg is a socialist rag…

  6. 6
    PeakVT says:

    A commenter posted the dialogue here.

    ETA: Just noticed the corporate logos on the boat (yeah, I’m slow). Is there nothing Romney won’t sell?

  7. 7
    dmsilev says:

    It boggles the mind that Bloomberg, of all publications, would run a story like this. Especially with the title “Romney’s Bain Yielded Private Gains, Socialized Losses”. It’s the sort of story I’d expect out of let’s say Mother Jones, not a solidly business-oriented pub.

  8. 8
    PaminBB says:

    Organized crime. RICO their asses.

  9. 9
    cathyx says:

    But isn’t it obvious from the picture above that he did it for his grandchildren? He must love them so much to put so many people out of work for them.

  10. 10
    Janks says:

    I just don’t see how any halfway rational person can simply say this is just good business the way all the Fox pundits did yesterday.

  11. 11
    Gin & Tonic says:

    Various angles are starting to get traction in the financial press. There’s this piece from Bloomberg, now Felix Salmon is in with a piece today about that $100 million IRA and the shenanigans that may have led to that kind of value (playing games with Bain Capital valuations), Henry Blodget had a piece last Thrusday or Friday asking the same thing, and wondering how, precisely, Willard got to be 100% stockholder of Bain Capital if it was formes as a Bain & Co entity (i.e. why didn’t Bain & Co end up with a piece.) These are finance people, not politics people, presumably Willard’s kind of people, and they’re asking uncomfortable questions.

  12. 12
    Michael G says:

    McCain’s VP vetting file on Romney has been leaked:

    http://www.scribd.com/doc/7858.....-Oppo-File

  13. 13

    BOOOM!

    Mitt Romney, Abortion Profiteer … there, I said it.

  14. 14
    Gin & Tonic says:

    @PeakVT: Those logos are Photoshopped on.

  15. 15
    gnomedad says:

    Someone who understands this please explain: if LBOs are so risky, how do they get the loans in the first place?

  16. 16
    schrodinger's cat says:

    Bain has not been the only company that has done stuff like this. This is what is taught in B-schools, this has been how business has been practiced over the last 30 years.

  17. 17
    slim's tuna provider says:

    @dmsilev: liberals aren’t the only group you can split into warring factions. not all finance people are the same — they often have competing ideas about finance. this is why i cringe every time someone here starts on about tumbrels and puts everyone on the defensive. for god’s sake, richard EFFING posner, long the whipping boy of outraged emotional leftists, called the republicans loony!

  18. 18
    PeakVT says:

    @Gin & Tonic: Ah, okay.

    @Michael G: Is there a non-paywalled version of that PDF somewhere?

  19. 19
    Walker says:

    @schrodinger’s cat:

    Exactly. But it is always good to have a poster child. And Bain is it.

  20. 20
    Michael G says:

    So the leaked McCain vetting document is way old, but it’s new to me, and full of gems:

    ABORTION: Romney Was Pro-Choice, Then Not Pro-Choice, Then Pro-Choice Again, Then Pro-Life

    “Bainies” Were Known For Company Songs And Secrecy, Compared To KGB.

    Romney Sat On Board Of Damon Clinical Laboratories, A Bain Capital Portfolio Company Fined Nearly$120 Million In 1996 Due To Medicare Fraud.

    Romney Raised Gun Licensing Fee By 400 Percent.

    In 2004, Bain & Co. received a multi-million dollar contract from the National Iranian Oil Company.

    (Google docs link: https://docs.google.com/file/d/0BwOAQWCceGfJSGJPY2l6MkFQOTg/view?pli=1&sle=true )

  21. 21
    GregB says:

    It’s Mitt’s destiny to be the king of Bain.

  22. 22
    Gin & Tonic says:

    @PeakVT: Actually, it’s just one logo, and the joke in “Ampad pension fund” is that Ampad is one of the companies that Bain drove into bankruptcy, so ha ha, that boat is the proceeds of the no-longer-existing pension fund. Or something. I don’t find “humor” that tries too hard like that to be very funny, but YMMV.

  23. 23
    Brother Shotgun of Sweet Reason says:

    @Gin & Tonic: Actually, it’s one phrase photoshopped on, the name of the boat:

    “AMPAD Pension Fund”

  24. 24
    SteveinSC says:

    My oh my, now where are all the pearl-clutching exquisite prigs that pass for commenters on this blog? Where are the Harold Ford fan-boys and Cory Booger’s porte-paroles? “Yes, you can attack Bain, but it would be wrong.” “These business operations are very complex and criticizing them could be counter productive…” Blah, Blah blah. These pansies have been pushed aside, now that Obama has awakened from his bipartisan torpor and realized just what the fuck in going on. The attacks have drawn blood and even Karl Rove is whining. Lee Atwater started this shit so now his crowd can get a dose of their own medicine. And best of all this shit works.

  25. 25
    chopper says:

    the ironic thing is, this shit actually does give mittens an insight into how the national economy works. bcause this sort of garbage is how our economy operates these days.

  26. 26
    jwb says:

    @Michael G: I don’t think this is the VP vetting file, although it may have been incorporated into it. This looks more like the opposition research file from the 2008 primaries.

  27. 27
    Jess says:

    I don’t follow business issues closely, but doesn’t it seem likely that the business people who actually produce value would despise what Bain does? Is there a backlash waiting to happen (or beginning to happen) in the business community against vulture capitalism? Anybody know anything about this?

  28. 28
    khead says:

    I love that scene.

    “Your place got struck by lightning?” Fuck you, pay me.

    Heh.

    My place has actually been struck by lightning….

    …two different places.

    Glad I didn’t owe shit to Pauly.

  29. 29
    Amir Khalid says:

    What bothers me about this kind of deal is that Bain Capital and companies like it borrow the money to buy up these unfortunate companies, then the debt is transferred to the acquired company which finally winds up broke and hollowed out. I understand how that happens, more or less, but it’s a terrible abuse of the financial system. Is there no way to outlaw this kind of financial predation?

  30. 30
    Foxhunter says:

    Google Tony soprano + Bain Capital. YouTube has a great summary.

  31. 31

    @Amir Khalid:

    Is there no way to outlaw this kind of financial predation?

    One Democratic President. Veto-proof Democratic majority in the House. Filibuster-proof Dem majority in the Senate.

    OR… a cultural sea-change so radical, that the GOP (or at least some of it) suddenly discovers the joys of ethical behavior in business and changes its ways.

    The first option is unlikely anytime soon, the second one even less likely. One step at a time, I suppose.

  32. 32
    Janks says:

    @ Gnomedad
    That is probably why mittens name was left on all those docs. He was the money broker for the loans. His name was like having a co-signer.

  33. 33
    urlhix says:

    @Michael G: If that’s real, Rmoney is burnt toast.

  34. 34
    Janks says:

    @ Gnomedad
    That is probably why mittens name was left on all those docs. He was the money broker for the loans. His name was like having a co-signer.

  35. 35
    Janks says:

    @ Gnomedad
    That is probably why mittens name was left on all those docs. He was the money broker for the loans. His name was like having a co-signer.

  36. 36
    gene108 says:

    From 1995 to 1999, Bain Capital tripled Dade’s debt from about $300 million to $902 million. Some of the debt was used to pay for acquisitions of DuPont Co.’s in-vitro diagnostics division in May 1996 and Behring Diagnostics, a German medical- testing company, in 1997. But some was used to finance a repurchase of half of Bain Capital’s equity for $242 million—more than eight times its investment—and to pay its investors almost $100 million in fees.

    This is what private equity firms do.

    They have no real value to society, other than making money for rich people.

    Since rich people write the rules, they get to keep doing this sort of thing.

  37. 37
    What Have The Romans Ever Done for Us? (formerly MarkJ) says:

    Methinks Romney is on course to get the full Al Gore treatment from the press in the near future, which is bad for Mitt because he has actual weaknesses in his background – the press doesn’t even have to make stuff up.

    It will be fun to watch this happening to a Republican for once, even if it isn’t good for our political discourse. He’s Michael Douglass’s Gordon Gekko without the charisma.

  38. 38
    Janks says:

    @ Gnomedad
    That is probably why mittens name was left on all those docs. He was the money broker for the loans. His name was like having a co-signer.

  39. 39
    BGinCHI says:

    @urlhix: Seriously. It’s a wasteland of layoffs and profits for rich investors.

    Since Romney was never liked within the GOP, there is no way they are going to keep secrets about him forever. If this isn’t the real thing, it’ll come out eventually.

  40. 40
    Roger Moore says:

    @gnomedad:

    if LBOs are so risky, how do they get the loans in the first place?

    By offering very high interest rates on the bonds. You know those debt service payments that choke the companies almost as much as the management fees? Those are going to the bondholders in exchange for them accepting the risk.

  41. 41
    Steeplejack says:

    And people chuckled over Matt Taibbi’s outlandish “vampire squid” image.

  42. 42
    gene108 says:

    @Amir Khalid:

    It’s called “creative destruction” or something like that.

    It unleashes the power of the free market to wash over these under performing companies and makes everybody better off in the long run.

    Seriously…there are people, who believe this is the good works done by private equity firms…

  43. 43
    Anoniminous says:

    @gnomedad:

    They’re not risky for the people and firms who get in on the ground floor.

    The procedure was:

    1. Buy a company with borrowed money

    2. Once it’s private use the pre-takeover Balance Sheet to issue massive amounts of debt which is used to pay-off the money borrowed to buy the company and line your own pocket.

    3. Gut the future of the company by “focusing on the bottom line” or “putting the emphasis on the core business” or some bullshit like that

    4. Gutting the company inflates financial ratios in the near-term since there isn’t anymore being “wasted” in an attempt to keep the company operating in the long term

    5. When the financial ratios look good but before the plundering has become obvious do an IPO and unload it

    And that’s how US manufacturing was destroyed.

  44. 44
    urlhix says:

    @BGinCHI: I’m going to get a lot of mileage out of his raising gun licensing fees while Governor. The local rednecks are going to love that tidbit.

  45. 45
    Chris says:

    @Judas Escargot, Acerbic Prophet of the Mighty Potato God:

    Close, but wrong. Replace “Democrat” with “liberal” and you’ve got it.

  46. 46
    The Moar You Know says:

    Tell me how what they did is any different from Paulie’s bust-out of the Bamboo Lounge?

    That was a work of fiction.

    Mitt Romney destroyed real companies, real pensions, real lives. And got insanely wealthy doing so.

  47. 47
  48. 48
    Tonal Crow says:

    @Michael G: Oppo file perhaps (if it’s authentic), not vetting file.

  49. 49
    Xenos says:

    Someone at Huffpo combined the Goodfellas and the Sopranos bustout explanations, here.

    This is noticeable because the sopranos Sequence, at the very end, shows Tony piloting a giant pleasure boat bought with his bustout profits, just like the boat in the Romney picture.

    If someone can do a version of this that juxtaposes these images it would be pretty powerful.

  50. 50
    Brian says:

    But wait David Gergen on CNN said that Obama can’t call Romney a liar because we can’t prove that he can’t prove that we can’t prove that he can’t prove that Bain even existed in 1999.

  51. 51
    gene108 says:

    @Jess:

    I think the whole private equity, LBO, and hedge fund set up has grown so powerful companies that actually produce things consider it the “new normal”.

    There was a case to be made that in the 1970’s and 1980’s corporations made some poor expansion decisions in earlier years and weren’t very efficient or profitable and some of their assets were under performing and dragging down the overall business.

    In terms of inefficiency hurting an industry, I think the auto industry losing market share to foreign competitors is a prime example of why under performing businesses can’t keep doing what they’ve always done, even if they are viable in the short term.

    I just think the private equity/LBO/hedge fund method of investing and then looking to make a quick buck was not what was needed in the 1980’s, but that’s what Reagan’s rich Republican types wanted to do, so he let them do it.

    There’s probably many better ways to have whatever layoffs and restructuring American industry needed in the 1980’s to become competitive globally, but that was never allowed materialize because the financial whizkids came in and sold everyone on the greatness of making a quick buck, even if you have to destroy a few thousand jobs in the process.

  52. 52
    bluehill says:

    @chopper

    the ironic thing is, this shit actually does give mittens an insight into how the national economy works. bcause this sort of garbage is how our economy operates these days.

    Exactly. I wonder if the tea party-types realize that Romney’s business experience is extracting the value out of companies by loading them up with debt to pay off his investors, which is essentially what Bush did with his tax cuts and unfunded wars. It is ironic.

  53. 53
    Anoniminous says:

    @Amir Khalid:

    Yes but you have to have something called “Financial Regulation.”

    Which causes glibertarians and Conservative to clutch pearls whilst collapsing on a fainting couch.

  54. 54

    @SteveinSC:
    I don’t think they exist. The closest I can think of is Burnsy, and he hates this crap too.

  55. 55
    Rafer Janders says:

    Off-topic, but here’s what I don’t get about Romney: if I had his money, and those adorable grandchildren that you see in the front of the boat, I’d devote every minute of my time to good works, enjoying my life, and to spending as much time as possible with the kids. I wouldn’t waste years, years, going to potluck dinners in Iowa and New Hampshire and selling off little pieces of my soul to the most craven elements in the GOP.

  56. 56
    gnomedad says:

    @bluehill:
    Heh. “Romney knows how business works … and wants to give us more of the same.”

  57. 57
    flukebucket says:

    @Foxhunter:

    I love it when Tony says, “You ain’t the first guy to get busted out!” What a great scene. Soprano is like Romney. Busting people out was his bread and butter!

  58. 58
    Ash Can says:

    @Jess: I think this is why we’re seeing an article like this — because there’s a contingent in the business world that sees this kind of thing as bottom-feeding, and doesn’t find it very attractive. And bear in mind it appeared in Bloomberg — dmsilev may have been surprised to see it, but Bloomberg actually is what the WSJ used to be: straight business, minimal extraneous crap. Serious, objective business news for serious business readers. I was in the finance industry for 15 years myself, 80s through the 90s, and there was very definitely a large contingent that viewed the junk bond folks as a bunch of reckless slobs who gave the whole equities industry a bad name. This is why nowadays, I might not show it by posting violent rhetoric, but I don’t think any punishment is too severe for the investment bankers who crashed the economies on either side of the Atlantic. Not only did they create economic hardship for people the world over, they took an industry that really did, when working properly, smooth the way for economic development and progress, and basically destroyed it. I’d go so far to say that if these shitheels were put up against the wall, the first people to grab rifles would be other people from their industry.

  59. 59
    Rafer Janders says:

    @The Moar You Know:

    Actually, “Goodfellas” wasn’t really fiction. Henry Hill and the characters in the movie were all real people; it was based on the true crime book “Wiseguy” by Nick Pileggi. So, every less difference than you think….

  60. 60
    Nellcote says:

    from the link:

    By the time the company went bankrupt in 2001, it owed $554 million in debt against assets valued at $395 million. Many creditors lost money, and 750 workers lost their jobs. The U.S. Pension Benefit Guaranty Corp., which insures company retirement plans, determined in 2002 that GS had underfunded its pension by $44 million and had to step in to cover the shortfall.

    What’s the total for pension “shortfalls” from Bain projects?

  61. 61
    jl says:

    @gene108:

    ” This is what private equity firms do. ”

    This what leveraged buyout firms who hide under the ‘equity capital’ umbrella do.

    Equity capital also includes venture capital.

    As the nature of Bain’s business model is reported, at some point we should call Bain a ‘leverage buyout’ company not an ‘equity capital’ company.

    As in, I am a rodent, and rodents are cute. Bunnies and hamsters and mice are rodents. Therefore I am cute. But wharf rats, and sewer rats are rodents too. Before you make me a pet, you might want to find out what kind of rodent I am.

    Bain was more than just a rodent, it was a specific kind of rodent.

    Edit: And rats are just an example with appropriate connotations. I understand rats were slandered in this example, and I apologies to all rats (who research has shown, are quite altruistic towards their fellow rats)

  62. 62
    Roger Moore says:

    @gene108:

    There was a case to be made that in the 1970’s and 1980’s corporations made some poor expansion decisions in earlier years and weren’t very efficient or profitable and some of their assets were under performing and dragging down the overall business.

    And there’s probably some argument for finding sectors of the economy that are contracting and shutting down the weakest companies while they still have some value. I’d use a hunting metaphor rather than the usual scavenger metaphor. If there isn’t enough food for all the deer to survive the winter, it’s better to kill some in the fall while they still have some meat on their bones, rather than waiting for some of them to die of starvation. The ones who aren’t hunted will come through the winter healthier than they would have with more competition, and hunters get some meat.

    The problem is that there’s no game warden managing the process. We’re turning loose a whole bunch of hunters with no season and no bag limit; they’re free to shoot all the ammo they can afford and bring home anything that looks tasty. The hunters may love it, but it’s terrible for the environment.

  63. 63
    scav says:

    @Rafer Janders: I’ve not seen him show up at so many of the potlucks with hot-dish, more a lot of the 25K a plate dos where VIP parking is assumed, and he’d be doing those in any case. Raising Money — only the pretext changes.

  64. 64
    Mino says:

    @bluehill: I wonder if the tea party-types realize that Romney’s business experience is extracting the value out of companies by loading them up with debt to pay off his investors, which is essentially what Bush did with his tax cuts and unfunded wars.

    Win.

  65. 65
    Xenos says:

    @SteveinSC: I’ll give a try.

    Private equity puts the food on the table in my house, as these deals require a lot of professional services to pull off. So feel free to ignore what I am writing if that better fits your standards.

    I would compare PE to practicing law. You can do it ethically and honestly, and even though some cases may not succeed, and may thereby leave your clients worse off than if they had never hired you, this does not necessarily mean the lawyer is a bad lawyer or a bad person.

    Some lawyers are pretty successful but are unethical and dishonest – they encourage and accommodate their clients in filing frivolous lawsuits, run up absurd bills in divorce cases so they can wipe out the marital estate in order to punish the opposing party who has fewer resources, mix their business with their clients and then run up bills to drain their clients resources, allow their clients to make dishonest loan applications so real estate deals can get done that pay the fees but leave a paper trail for their clients that risk that client spending a few years in federal custody.

    What sort of lawyer someone is is not always clear to laymen until some years pass and the entirety of the relationships of that lawyer can be considered and weighed. Similarly, looking at any one deal that Romney did really is not enough to tell if he is an entrepreneur or a pirate. Sometimes a single deal is so egregious you know something is crooked, but it really takes years to sort these things out.

    So I hesitate to jump to judgment here. But I am really pissed about Ampad, because they made really good yellow legal pads, and I miss them.

  66. 66
    burnspbesq says:

    @Janks:

    You used “rational person” and “Fox pundit” in the same sentence?

  67. 67
    Roger Moore says:

    @jl:

    Bunnies and mice are rodents.

    Technically, bunnies are lagomorphs, not rodents./pedant

  68. 68
    BGinCHI says:

    David Corn better at least get nominated for a Pulitzer for his reporting on this. He’s killing it:

    http://www.motherjones.com/pol.....transition

    Or maybe other journos won’t recognize his work….

  69. 69
    danielx says:

    In one of the various “Hitler hears” youtube clips, there’s a scene where Hitler is raving that Obama could play golf from now until November and win by ten points. I laughed at the time, but I’m beginning to wonder…

  70. 70
    RareSanity says:

    If there is any doubt regarding the hatred for Willard, even in the GOP, this should quash it…

    How does a full, unedited, un-redacted copy of the McCain campaign’s file on Willard get out?

    In the 20+ years that I have paid attention to national politics, I have never heard of anything like this happening before.

  71. 71
    WereBear says:

    @Rafer Janders: if I had his money, and those adorable grandchildren that you see in the front of the boat, I’d devote every minute of my time to good works, enjoying my life, and to spending as much time as possible with the kids.

    I gather fun time with Grandpa Mitt is more like Full Metal Jacket than “Mr Rogers.” This is a guy who lost to a recently pregnant daughter-in-law and revamped the Romney Games to add more events he can win.

    I don’t think it’s fun to play checkers with him. Not with your dad standing in the doorway, frantically signaling to throw the game.

  72. 72
    jl says:

    @Roger Moore: thankyou.

    So, gerbils are rodents. Forget the bunny.
    Gerbils are cute. Sewer rats are not cute.

  73. 73
    redshirt says:

    We’re not bad mouthing Venture Capitalism, are we? Cuz it rules.

  74. 74
    burnspbesq says:

    @gnomedad:

    Someone who understands this please explain: if LBOs are so risky, how do they get the loans in the first place?

    The polite term for”junk bond” is “high-yield bond.” the interest rate is high to compensate the lender for taking on the additional risk. I should say “lenders,” plural, because the loan is syndicated to limit any one lender’s exposure. The idea from the lender’s side is to take small pieces of a lot of deals, so that the gains from the winners outweigh the losses from the losers. And if you look at the aggregate data, the winners outnumber the losers by a decent margin. The reason such a high percentage of Bain Capital’s deals went bust is that their leverage ratios and dividend/fee takeouts were egregiously high, even by PE standards.

  75. 75
    Amir Khalid says:

    @RareSanity:
    Does anyone have a list of highlights?

  76. 76
    J. Michael Neal says:

    @Ash Can: This wasn’t just published in Bloomberg. It was written by someone who runs a private equity firm. Whether gene108 believes it or not, the way Bain is/was run is not the only model for private equity. There are a number of firms that do pretty much what they should be doing. This can include simply reforming the management team to get competent place in place or in can involve breaking up a company that is actively destroying value.

    There are times when this is going to involve shutting things down, putting people out of work and selling off the pieces. That’s because both management and ownership of companies can not only become set in ways that are no longer profitable but also sentimental to the point that they will drive the firm all the way into the ground before calling it quits. There are a lot of times when everyone is better off if someone can step in and wrest control of a company away from them and liquidate things while there’s still something to liquidate.

    However, no one engaged in that business should expect to make huge margins or become popular with regular people. Romney engaged in shenanigans necessary to make those huge margins and expected to get popular. Both attributes piss of guys like the one who wrote this column.

  77. 77
    RareSanity says:

    @Amir Khalid:

    I haven’t found any, as of yet.

    You can a look at the comments thread of the reddit post where I found it.

    There are quite a few people that have pointed out some juicy tidbits.

    For example:

    “OWNING A GUN: Romney Said He Owned A Gun Himself, Then Admitted It Was Not His Gun”

    “FOREIGN POLICY: Romney has no foreign policy experience.”

    And…
    “Romney Charged Fee For Being Blind. “It now costs to be blind in Massachusetts. The state’s approximately35,000 blind and legally blind residents must now pay $10 annually for a certificate of blindness and $15 everyfour years for a blind identification card. Without the formerly free documents, blind people cannot take advantageof tax abatements, affordable housing programs, health care services, transportation discounts and otherbenefits. … The fees originated in February, in Gov. Mitt Romney’s budget proposal for fiscal 2004.” (Shaun Sutner,“Advocates Fight Fees For The Blind,” Telegram & Gazette , 8/5/03)”

  78. 78
    jl says:

    @redshirt: That was a point I made in comment above. My understanding is that there are several types of business models that are called ‘equity capital.’

    I have been curious to see what the portfolio of Bain’s deals look like. Looks like mostly leveraged buyouts.

    A bit before my time in terms being old enough to follow, but I believe that leverage buyout firms used to call themselves ‘leverage buyout’ firms. But there were so many questions about how much of their business model was adding value versus playing financial and legal shell games with different sorts of debt and assets, that they decided they would prefer to be lumped with other kinds of ‘equity capital.’

    And it seems to me that equity capital is a better more accurate name for venture capitalists than leveraged buyout firms. Don’t venture capitalists put up actual equity to back new firms, or to restructure older firms? Or is it common for them to use leverage and use a lot debt backed financing for their projects? Let me know.

  79. 79
    pseudonymous in nc says:

    @J. Michael Neal:

    Whether gene108 believes it or not, the way Bain is/was run is not the only model for private equity.

    As I mentioned last night, Michael Moritz of Sequoia Capital had a few choice words about leveraged buyouts in general: namely, if it’s good enough to buy, buy it with your own money.

  80. 80
    Ash Can says:

    @RareSanity: Good point. And it doesn’t bode well at all for Romney if the folks who should be rallying around him as their candidate are instead leaking land mines to the press. I just hope that mega-tons of Citizens United cash get wasted on this lemon in the process, and that some nefarious donors feel a real pinch, if not go broke altogether.

  81. 81
    MCA1 says:

    I think the PE model can and often is actually helpful, especially in the lower to mid market. It steps in and has the resources and experience to take a smallish, say family-owned, company without a ton of financial market sophistication or the resources to become a big player, and no way to go public for the cash to expand, and provides them with the opportunity to do so. In the process it cashes out the founders (if they’re smarter than and not as greedy as those who accept deals with fraudsters, like the programmers highlighted on another BJ thread earlier today). Through prudential management, the company is often then grown to the point where it can be wed to a larger conglomerate in a significant merger, or even taken public. That’s the justification for private equity (although not enough justification for the massive compensation that flows to its practitioners, IMHO).

    But when looked at from the other side, with the rapacious appetites of the investors in funds for returns that just can’t be achieved without significant risk-taking, good asset-monetizing and/or overleverage, that’s where we see the problem. That and the fund operator’s fees. All the incentives on the fund side point to stripmining, rather than carefully growing a company now that it has a connected board and access to expansion capital. Sometimes it works, but more often than would happen with prudent caretaking, you see companies go massively overleveraged and collapse, and offset in a portfolio scenario by the ones where the fund operator sells at the right time and realizes a 500% IRR. It’s much more lumpy sometimes than good stewardship across the board would predict.

    It may be a good blunt instrument for the Obama campaign to just have some of the recklessness of Bain highlighted and have it come across as bashing private equity and the Masters of The Universe and .1% generally. But it would be more devastating, I think, if you could get some of the more responsible p.e. bigwigs to come out and denounce the way Bain was doing things. Then you’ve got “See, even the financial sector thinks this guy was too greedy and ran his company immorally. Why on Earth would we trust him with the entire economy?” An article from Bloomberg that does just that? Milk and honey, as far as I’m concerned.

  82. 82
    Roger Moore says:

    @jl:
    Yes, gerbils, hamsters, guinea pigs, and chipmunks are all cute rodents. Squirrels and beavers are rodents that some people think are cute but that other people hate with a fiery passion because they’re destructive. Sewer rats are a disease vector.

  83. 83
    burnspbesq says:

    @Xenos:

    But I am really pissed about Ampad, because they made really good yellow legal pads, and I miss them.

    Thank FSM that Bain never got its filthy paws on Rhodia or Levenger.

  84. 84
    RareSanity says:

    @Ash Can:

    When stuff like this, is coming out this early, I don’t there’s enough Citizen’s United cash on earth to counter everything.

    Think of all the ads the Obama campaign gets from something like this, at an absolute pittance. It’s like buying campaign ads in bulk at Costco.

  85. 85
    Strontium 90 says:

    @bluehill: Yeah, but the President is still black…

  86. 86
    redshirt says:

    @jl: Indeed. I’ve been involved with a VC firm for some 15 years now, and from what I can gather, it works like this: Some really rich guys want to get even richer, so they go around looking for companies to invest in or create. I’ve worked for 2 companies that the VC firm funded, and each is changing the world for the better. The guy who create my current company works directly for the VC firm, creating yet more companies – he’s a super genius from MIT and his latest company is attempting to cure cancer.

    Most of the big tech companies you know of were either were VC funded, or the similar “Angel Investors”.

    So, I don’t see what any negatives could be – rich folks get richer, but they only way they do is if the companies they helped to create succeed, at least to a degree.

    Often, these days, that means making it to IPO or getting bought out. But that’s our system.

    I have seen so many wonderful ideas come to life because of VC money, and I think it’s awesome.

  87. 87
    bluehill says:

    @Ash Can: It isn’t a good sign for Romney that whomever the execs were at Bain during 1999 to 2002 haven’t come out and said that they were in charge. I wonder what they are waiting for or, on the other hand, why they aren’t rushing to support the guy that probably made them very wealthy.

  88. 88
    jl says:

    I think mid 70s through early 80s was when leveraged buyout firms were called just that, and there was a leveraged buyout industry. And there were news stories about it.

    Big difference is between whether the firm coming is was invited in, and has a more balanced mode of financing (which I think is called ‘growth capital’),

    or

    the take over is involuntary, and can occur with firms that are profitable, but some gimmick in finance and corporate law allows a firm to capture control with almost nothing but debt backed finance. That is where it is questionable whether the leveraged buyout is producing something of value, or just collecting rents and socializing costs, from financial and legal tricks.

    But I don’t know the details. Maybe some legal or finance person one will come by who knows.

  89. 89
    Jess says:

    @gene108: @Ash Can: Thanks. I still don’t really understand, but at least I have a clearer idea of what it is I don’t understand. The hunting analogy Roger Moore offered is interesting, but if accurate underscores how predatory that particular branch of business is seen even in the business community. This makes me even more curious about why non-predatory businesses aren’t pushing for better regulation–or are they? Aren’t they worried about being hunted into extinction? And aren’t “legitimate” venture capitalists concerned about the more predatory ones depleting the herds?

  90. 90
    catclub says:

    @Jess: “Is there a backlash waiting to happen (or beginning to happen) in the business community against vulture capitalism?”

    As soon as the VC’s do not have all the money, that backlash is coming. Until then, crickets.

  91. 91
    jl says:

    @redshirt: Yes. The term ‘equity capital’ is like ‘rodent’, it covers a number of critters.

    If the story in this post is representative of what Bain did, then we should indicate its distinct species of equity capital, which was ‘leverage buyout’ species, and actually did not involve much risk taking with its investors equity at all. It borrowed money to play financial and legal tricks, and socialize any losses from the ventures.

    So, why not, on this blog (Cole?) from now on call Bain what it was: LEVERAGED BUYOUT BUNCO ARTISTS.

  92. 92
    Ash Can says:

    @J. Michael Neal: Yep. Take for example the ex-husband of friend-of-the-Obama’s Desiree Rodgers. John Rodgers, a venture capitalist, was a steady client of the firm I worked for, and I saw him around the office numerous times. His firm provided start-up funding to local businesses (including minority businesses; IIRC John Rodgers never forgot his roots). Was he wealthy? Sure. But he, and his firm, played by the rules, and they provided a real service to a lot of people. That’s the way it should be, and hooligans like Mitt Romney can take a flying leap off the end of Navy Pier.

  93. 93
    RareSanity says:

    @bluehill:

    Bain Exec #1: “You couldn’t pay me enough to go on the record supporting that weasel.”

    Bain Exec #2: “He is responsible for putting a lot of money in our pocket, you don’t think we owe him at all?”

    Bain Exec #1: “You’re kidding, right? Since when do we invest money into an entity whose value is tanking?”

    All Bain Execs: (nod in agreement)

  94. 94
    Mike Goetz says:

    The greatest line in that leaked oppo file is the very last one, quoting Romney:

    “I thought that getting rich and famous would make me happy. Boy was I right!”

    Probably from some “comedy” routine he was doing somewhere, but still.

  95. 95
    PeakVT says:

    @MCA1:

    All the incentives on the fund side point to stripmining, rather than carefully growing a company now that it has a connected board and access to expansion capital.

    I think the key differentiator between good and bad PE is when the PE firm takes its cut. I suppose there are rare instances where a PE firm manages to buy a cash-rich firm on the cheap, but otherwise, if they take their cut up front, the firm is strip-mining.

  96. 96
    Xenos says:

    @burnspbesq:

    The polite term for”junk bond” is “high-yield bond.”

    Chasing yield – when there are sufficient trillions of cash washing around chasing a couple percentage of yield all sorts of stupid and abusive lending gets funded. This was also an indirect cause of the housing bubble. Does anyone know who was syndicating the Bain loans? Because nobody connected enough to buy in as investors would have been foolish enough to be buying the junk bonds.

    I remember reading that Romney work with Milken on this sort of thing back in the 80s. Takes me back to my youth… my sister was paralegaling for Boesky’s lawyers when all that blew up.

  97. 97
    Culture of Truth says:

    I was wondering if there was a “Hitler Finds Out” for Romney’s campaign

    If he doesn’t win, Romney will make an excellent Dread Pirate Roberts.

  98. 98
    Roger Moore says:

    @J. Michael Neal:

    This can include simply reforming the management team to get competent place in place or in can involve breaking up a company that is actively destroying value.

    Or buying a misfit division from a company that’s decided it wants to focus more tightly on one part of its business. That’s how my dad’s company got bought by private equity, and my impression is that their management has been fine. The problem is that you get cowboys in any industry.

  99. 99
    maya says:

    You know who would make a great veep for Romney? Michael Milken. The Junk Bond King. This was the first form of leveraged buyouts popular during the Reagan years.
    Issue bonds to purchase a company with liquidity { pension money, inventory like timber firms,raw materials etc} promising high yields.
    Take over the company, usually by hostile takeover stock purchases, gut the company liquid assets, transfer pension program to shifty Insurance companies who then file for bankruptcy, pension gone poof! Then bankrupt the firm itself leaving the bond investors holding “junk”.

    This equity capital crap is just another variation of the old theme.

    Edit: I see that a few of you are onto this already.

  100. 100
    mclaren says:

    @burnspbesq:

    Sage advice from the expert. Still waiting for you to apologize for your supremely confident prediction that the Supreme Court would uphold Obamacare by a 7-2 margin, spit-for-brains.

  101. 101
    Bnad says:

    I was one of the people defrauded by one of the exact type of takeovers Bain & Co did. It was only hundreds of dollars, but still…
    Back in 2009 I prepaid for a high end massage for my girlfriend (for our anniversary) at the spa in the Waldorf Astoria in NYC, owned by Spa Chakra Acquisition Corp. (independent of the Waldorf itself)
    That fall, before my girlfriend could use her prepaid massage, they went belly-up and filed for bankruptcy. Despite filing a proof of claim, I never recovered the money I paid nor did my girlfriend get the massage I paid for.
    But through the little research I did, I learned that was Spa Chakra’s second bankruptcy filing in two years. They filed the first time with debt of ~$4 million. Then they were bought by investors who put a little money in and started up the business again. When they filed the second time, less than two years later, their debt was ~$100 million–all from 18 months of running a massage business with only three or four locations.
    My money was part of that $100 million. I wonder whose boat it bought.
    There really should be personal consequences for saddling a company with debt that can never be repaid and then transferring that borrowed money to yourself.

  102. 102
    HyperIon says:

    *sigh*

    Another violation of the Matt Yglesias rule: The first sentence in any blog post must contain no grammar or spelling errors. The sentence should actually scan, that is, make sense.

    The rule is so named because of Matt Yglesias’ frequent inability to craft such a first sentence in his posts.

  103. 103
    Jay C says:

    @RareSanity:

    Think of all the ads the Obama campaign gets from something like this, at an absolute pittance. It’s like buying campaign ads in bulk at Costco.

    Naaah, this stuff all seems to emerging, unsolicited, from various “free” sources. It’s more like Costco sending a truckload of campaign ads to your place, unloading them for you, and thanking you profusely for not charging them.

  104. 104
    J. Michael Neal says:

    @pseudonymous in nc:

    As I mentioned last night, Michael Moritz of Sequoia Capital had a few choice words about leveraged buyouts in general: namely, if it’s good enough to buy, buy it with your own money.

    There are some good reasons to use debt to buy companies and it’s not all just a scam. Some of it stems from the differing ways that our tax system treats debt and equity. Personally, I’m in favor of removing this aspect by treating most interest payments as what they are: return on capital rather than an operating expense and thus deductible. (The borderline between them is pretty damned fuzzy and it would be tricky, but it could be done and it would be better than what we have now.)

    But it’s not just the tax treatment. A large part of the reason for buying out a company is to provide unified ownership and management. If you go with a pure equity structure, it becomes very difficult to assemble enough capital to buy out the company and all you’d end up with is a different fractured ownership group and another big principal/agent problem.

    So debt is a necessary feature of the takeover world. It’s not necessarily a bad thing. Even using junk bonds can be fruitful. It’s how a company like Bain uses debt that’s the problem.

  105. 105
    Ash Can says:

    @Jess: I haven’t been in the business for years, so I don’t know if the legit guys are pressing for more regulation, especially since the meltdown. They certainly should be.

  106. 106
    bluehill says:

    @RareSanity: I hope that’s true, but I could also imagine this rejoinder.

    Bain Exec #3: Since he’s going to cut our capital gains taxes and make sure we keep our carried interest tax loop hole (which treats the income that hedge fund mgrs make as capital gains for tax purposes)

    Bain Exec #1: Oh yeah. I’ll call Kessler.

  107. 107
    Roger Moore says:

    @redshirt:
    Note, though, that not all Private Equity is Venture Capital. PE basically refers to any group of investors who buy out companies and keep them private rather than publicly traded. They may buy publicly traded companies and take them private, give startup money to tiny companies that are just getting off the ground, buy segments from companies that are trying to streamline, take over badly managed companies that need experienced management, or buy companies to stripmine their assets. As long as it involves buying a company and keeping it private, it falls under the umbrella of private equity.

  108. 108
    redshirt says:

    @Roger Moore: True enough. I was only praising the work of Venture Capitalists, which I see as an unambiguous good.

  109. 109
    burnspbesq says:

    @mclaren:

    As soon as you apologize for six years of rampant stupidity on this blog.

  110. 110
    burnspbesq says:

    @mclaren:

    If I recall, you were supremely confident that the law would be struck down. You blew the call completely. I got the outcome right.

  111. 111
    Ash Can says:

    @bluehill: This is what slays me dead about this whole Bain thing. Where I worked, if just one line item in a financial statement looked goofy, the analyst covering that company would be on the phone to that company’s CFO demanding to know WTF was going on. Such things as retroactive retirement and CEOs/directors/sole shareholders/owners with nothing to do with actually running the company were unheard of. If Mitt Romney were sitting in a meeting with our analysts, equities sales people, IPO people, etc. and saying stuff like he’s been saying for the past couple of weeks, he’d get physically thrown out into the hallway amid laughter and a hail of paperweights. Real business people simply do not do shit like this. His reputation as a business leader should be well and truly obliterated by now — and judging from the article in Bloomberg, I think this is the case.

  112. 112
    Roger Moore says:

    @redshirt:
    Venture capital can have varying levels of ethics, too. You can wind up with a situation like the one they had at Zynga, where the VCs decided the employees were doing too well in the IPO and demanded that a bunch of them give up their options or be fired, which would prevent the options from vesting. It was legal but totally unethical and undermined a big part of the startup culture, that employees of risky startups accept lower salaries in exchange for an equity stake in the company they’re building. Knowing that such a thing is possible is bound to hurt startups as a group, which seems like a really bad move.

  113. 113
    RareSanity says:

    @bluehill:

    Even the most oblivious Wall Street douche-type, has to recognize that the tax environment is about as good as it can get, regardless of who’s running Washington. With all of the anger from The Great Recession and the constant flood of scandals emanating from financial institutions, even the most dense of 1 percenters remembers the Wall St. conventional wisdom:

    “Hogs get fed, pigs get slaughtered…”

    They see the slaughterhouse truck backing in. Anyone, with even the slightest bit of intellect, knows that it’s time to lay low until the heat dies down. A Presidential election is the very worse time to have Wall Street’s ways be the leading story on the news every night because of Mitt Romney.

    But if the race is close all the way to November, that’s exactly what will happen.

  114. 114

    @J. Michael Neal:
    Maybe buying a company ought to not be easy. Judging from the results over the last 4 decades or so, making it easy hasn’t exactly worked out real well for the nation as a whole…

  115. 115
    bluehill says:

    @Ash Can: Agree. He would never say something like that to investors, but that’s not his target audience. It’s the average voter and Romney hopes that if he repeats this message enough they will believe it. His fellow business leaders and wall streeters know what’s up, but most of them support him so they probably keep quiet.

  116. 116
    Joel says:

    @jl: It’s actually the mice that are vicious fuckers.

  117. 117
    LanceThruster says:

    I bear no animosity towards children, no matter whose they are, but I can’t help getting the feeling that the kids on the front of Unkee Mitt’s boat will be completely indoctrinated on the benefits (and not the obligations) of privilege.

  118. 118
    Bill Arnold says:

    @RareSanity:

    Romney Charged Fee For Being Blind. “It now costs to be blind in Massachusetts. The state’s approximately35,000 blind and legally blind residents must now pay $10 annually for a certificate of blindness and $15 everyfour years for a blind identification card.”

    There is a perhaps-apocryphal story dating back to at least the 1950s that the Massachusetts Tax Commissioner once ruled that meal taxes applied to IV feeding. Massachusetts is picked on for this sort of thing. (I once found a scan of an old newspaper factlet about the IV feeding story.)

  119. 119
    Davis X. Machina says:

    Real business people simply do not do shit like this.

    That’s the difference between finance and business.

    Romney’s not a businessman — his father was, but not the son.

    He’s a financier.

  120. 120
    pseudonymous in nc says:

    @J. Michael Neal:

    There are some good reasons to use debt to buy companies and it’s not all just a scam.

    Point taken — and I think Moritz’s argument, more specifically, implied that if you borrow to buy, then you take responsibility for the debt, as opposed to dumping it in the company basement while you take your pick of the silver.

  121. 121
    Roger Moore says:

    @pseudonymous in nc:
    That sounds more like, “If you want to buy a company, it should be because you want to own it.” The problem with companies like Bain isn’t that they bought using a lot of debt; it’s that they bought companies to loot them, not to own them.

  122. 122
    burritoboy says:

    Even leveraged buy-outs can theoretically be defended. The problem is that Bain Capital was essentially getting paid first out of the proceeds of the debt sales for “work” of dubious value, rather than getting paid with the proceeds of increasing the equity value in a future IPO or acquisition by another player (though they did get those rewards too). You should be getting lavish rewards for fixing companies and taking them public again through your equity investment. You shouldn’t be getting lavish rewards for repeatedly issuing a bunch of debt that never gets repaid.

  123. 123
    Maude says:

    In the late 1980’s, hostile takeover was common. A lot of companies were destroyed and never were replaced.
    There is still quite a bit of one company buying another.

  124. 124

    @Roger Moore:
    Yes and one of the points of tax policy is to encourage and discourage various forms of behavior and it is certainly possible to do in this case. (certain people wouldn’t like it so it won’t happen…)

  125. 125
    RareSanity says:

    @Davis X. Machina:

    That’s the difference between finance and business.

    Now if we can get idiots in the media to be able to differentiate between those two subjects.

    It would really be a dream of mine if the media could easily tell the difference between business, finance, and economics. For some reason, they seem to think that they’re all basically the same thing. So if someone works in finance, they are obviously an expert on business and economics.

    Since that’s true, their opinion is every bit as credible on economics as someone like Paul Krugman.

  126. 126
    burritoboy says:

    Comment 104 has got it.

    The problem(s) with how Bain did business is more subtle than most commentators are describing.

    1. It’s not the leverage perse that was uniquely problematic, it was that Bain used the proceeds from that extra leverage to pay themselves outsized and unjustified amounts (dividends and consulting fees), when their primary focus should have been making money from pure investment returns from their equity holdings.

    2. There is a fairly severe problem with Modigliani Miller (MM) and worse (MM is capital structure irrelevance), that American business too eagerly bought the conclusion of MM without thinking through it’s assumptions. MM only holds in absence of asymmetric information, taxes, transaction costs and bankruptcy costs – a set of assumptions which can never hold in any plausible world we’re likely to encounter.

  127. 127
    Roger Moore says:

    @burritoboy:

    The problem is that Bain Capital was essentially getting paid first out of the proceeds of the debt sales for “work” of dubious value, rather than getting paid with the proceeds of increasing the equity value in a future IPO or acquisition by another player (though they did get those rewards too).

    This. Bain called their share in the company equity, but they demanded to be paid off like super-senior debt. The rule is that debt gets paid first and equity gets what’s left. Taking on debt to buy out equity at a massive profit is cheating the system.

  128. 128
    demz taters says:

    @Gin & Tonic: It’s darkly funny cuz it’s true.

  129. 129
    Elie says:

    @Rafer Janders:

    Man — he doesnt FEEL that love that way.

    I’ve known a person or two like him… they are not connected organically, emotionally to PEOPLE (except as doing what he wants them to do). That is why he says such goofball things — there is no censor inside that says “Mitt, what you just said doesnt feel right and its wrong”. Its not a matter of morality — its just there is no connection. The buzz is only about the power — He thinks “I control this or that, or this person or that person” THAT is what feels good for the dude. Policy shmolicy… do this or do that. None of it matters except for what he wants on any given day and shit, his team knows you had better be doing what HE wants…

    I think team O has his measure. And they are running it down to him.. yessiree.

  130. 130
    debit says:

    From the link with the oppo research:

    1994 Romney Remark On Homeless Veterans “Not One Of The Brighter Moments Of His Campaign.”
    “From all accounts, Mitt Romney’s visit to that veterans shelter just behind Boston’s City Hall Plaza was not one of the brighter moments of his campaign for US senator. When director Ken Smith told him that one of the things the shelter needed was fresh milk, Romney replied jokingly that maybe the veterans should be taught how to milk cows.”
    (Michael Kenney, “Romney Comment Leads To Milk Run,”
    The Boston Globe
    , 11/27/94)

    Jesus Christ.

  131. 131
    chopper says:

    @debit:

    the dude just says shit like that. and it really amps up when he’s in the presence of the poors.

  132. 132
    TS says:

    @Anoniminous:

    THIS – is the first time I fully understood why the post war business model disintegrated in such a spectacular fashion in the 1980s. It should be on every OFA ad until forever. It also destroyed manufacturing in most other developed nations. The “core business” argument appeared over and over again.

    Anoniminous Says:

    @gnomedad:

    They’re not risky for the people and firms who get in on the ground floor.

    The procedure was:

    1. Buy a company with borrowed money

    2. Once it’s private use the pre-takeover Balance Sheet to issue massive amounts of debt which is used to pay-off the money borrowed to buy the company and line your own pocket.

    3. Gut the future of the company by “focusing on the bottom line” or “putting the emphasis on the core business” or some bullshit like that

    4. Gutting the company inflates financial ratios in the near-term since there isn’t anymore being “wasted” in an attempt to keep the company operating in the long term

    5. When the financial ratios look good but before the plundering has become obvious do an IPO and unload it

    And that’s how US manufacturing was destroyed.

  133. 133
    hoppipolla says:

    delurking to say that this has been a wonderfully informative and high-level discussion. i love how the distinctions between productive and destructive PE have emerged from the give-and-take, without the commenting psychodrama that can derail a thread. smart bunch of commenters, this. thank you all.

    and speaking as the apartment-mate of a bunny (i could not in any honesty call myself his owner), i appreciate the disaggregation of my lagomorph friend from those filthy rodents.

  134. 134
    Weaselone says:

    @burritoboy:
    I would add that during the period this was taking place the cash made via IPOs is also questionable. A lot of the cash made by bringing the company public had far less to do with any actual value added to the firm by shrewd investment and skilled management and far more to do with goosing the ratios and dumping the firm in a market that would have paid a fortune for a lemonade stand so long as it had a webpage.

  135. 135
    Souvik says:

    And this is the guy they are hoping will reduce the National debt :-). Replace the word Bain with the word super-rich and America with Ampad… now you know what the future will look like under a Romney Presidency.

  136. 136

    @Chris:

    Close, but wrong. Replace “Democrat” with “liberal” and you’ve got it.

    You might have a point there, rabbit.

    (A very good point).

  137. 137
    apocalipstick says:

    @redshirt: That’s why many people are making the distinction between venture capital and vulture capital under the private equity umbrella. Venture capital can give you Staples (to use a Bain example); vulture capital gives you Ampad. Romney wants the cred of one while profiting mostly from the other.

Comments are closed.