Much like Leroy Jenkins, Romney's associates are regretting his decision to become a more active participant.



MIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIITTTTTTTTTTTTTTTTTTTTT T TTTTTTTTTTT ROOOOOOOOOOOOOOOOOOMMMMMNAAAAAYYYYYYYYYYYYYYYYYYYYYYYYYYY
\"God Dammit, Romney"

In before all the people who are going to claim private equity firms save jobs because they save companies, despite the fact that they buy healthy companies and then use their assets as collateral for low interest borrowing, fire a big chunk of the employees to create "value," sell off the firm at a profit due to the inflated value of the stock from that new "value," then watch the company go bankrupt 8-10 years after they bought it.

Safe!

And if Romney gets the nomination this is only the beginning, I would think one of the major themes of the Obama campaign would be to portray Romney as a vulture capitalist who walks on the throats of the middle class.

Good. If people looking at what you do makes you feel nervous, maybe you should change the way you do business.

CPennypacker: In before all the people who are going to claim private equity firms save jobs because they save companies, despite the fact that they buy healthy companies and then use their assets as collateral for low interest borrowing, fire a big chunk of the employees to create "value," sell off the firm at a profit due to the inflated value of the stock from that new "value," then watch the company go bankrupt 8-10 years after they bought it.

Safe!

Yup, staples is so broke right now, and dominoes.

Without private equity these firms would have been bankrupt anyway. These firms don' buy healthy companies they buy companies months away from bankruptcy. Sometimes firms are going to die, sometimes they can be saved other times it's to late.

Liberals don't understand how business works. They think you should always hire more no matter how little a client base you have and the government is made of magic that makes everything better.

This whole thing can only serve to strengthen Gingrich's chance at being on the ticket against Obama. Which is good for the people who want Obama to win, but at the same time, those are the same people who will look at the ticket and see that if the guy they want doesn't get in, Gingrich is plan B.

/off to google sweden's immigration laws, just in case

Criticizing the wealthy is class warfare!

Tingle007: CPennypacker: In before all the people who are going to claim private equity firms save jobs because they save companies, despite the fact that they buy healthy companies and then use their assets as collateral for low interest borrowing, fire a big chunk of the employees to create "value," sell off the firm at a profit due to the inflated value of the stock from that new "value," then watch the company go bankrupt 8-10 years after they bought it.

Safe!

Yup, staples is so broke right now, and dominoes.

Without private equity these firms would have been bankrupt anyway. These firms don' buy healthy companies they buy companies months away from bankruptcy. Sometimes firms are going to die, sometimes they can be saved other times it's to late.

Liberals don't understand how business works. They think you should always hire more no matter how little a client base you have and the government is made of magic that makes everything better.

Wow two companies. Good job. Standard conservative logic. I never said the goal of private equity was to destroy companies. It just so happens that the goal of a LBO PE firm is not to help the firm they are buying have long term success. They aren't charities.

Oh, but Staples! Clearly Romney is a business saint.

Tingle007: CPennypacker: In before all the people who are going to claim private equity firms save jobs because they save companies, despite the fact that they buy healthy companies and then use their assets as collateral for low interest borrowing, fire a big chunk of the employees to create "value," sell off the firm at a profit due to the inflated value of the stock from that new "value," then watch the company go bankrupt 8-10 years after they bought it.

Safe!

Yup, staples is so broke right now, and dominoes.

Without private equity these firms would have been bankrupt anyway. These firms don' buy healthy companies they buy companies months away from bankruptcy. Sometimes firms are going to die, sometimes they can be saved other times it's to late.

Liberals don't understand how business works. They think you should always hire more no matter how little a client base you have and the government is made of magic that makes everything better.

Right so if we lower taxes the job creators they will create jobs because lower taxes means they will spend their money creating jobs in companies that have no client base.

yert: Tingle007: CPennypacker: In before all the people who are going to claim private equity firms save jobs because they save companies, despite the fact that they buy healthy companies and then use their assets as collateral for low interest borrowing, fire a big chunk of the employees to create "value," sell off the firm at a profit due to the inflated value of the stock from that new "value," then watch the company go bankrupt 8-10 years after they bought it.

Safe!

Yup, staples is so broke right now, and dominoes.

Without private equity these firms would have been bankrupt anyway. These firms don' buy healthy companies they buy companies months away from bankruptcy. Sometimes firms are going to die, sometimes they can be saved other times it's to late.

Liberals don't understand how business works. They think you should always hire more no matter how little a client base you have and the government is made of magic that makes everything better.

Right so if we lower taxes the job creators they will create jobs because lower taxes means they will spend their money creating jobs in companies that have no client base.

And if you don't have a job it's all your fault because you are lazy.

Philip Francis Queeg: yert: Tingle007: CPennypacker: In before all the people who are going to claim private equity firms save jobs because they save companies, despite the fact that they buy healthy companies and then use their assets as collateral for low interest borrowing, fire a big chunk of the employees to create "value," sell off the firm at a profit due to the inflated value of the stock from that new "value," then watch the company go bankrupt 8-10 years after they bought it.

Safe!

Yup, staples is so broke right now, and dominoes.

Without private equity these firms would have been bankrupt anyway. These firms don' buy healthy companies they buy companies months away from bankruptcy. Sometimes firms are going to die, sometimes they can be saved other times it's to late.

Liberals don't understand how business works. They think you should always hire more no matter how little a client base you have and the government is made of magic that makes everything better.

Right so if we lower taxes the job creators they will create jobs because lower taxes means they will spend their money creating jobs in companies that have no client base.

And if you don't have a job it's all your fault because you are lazy.

-Young man like you, drunk every day at noon. Get yourself a job!

I have one

- Oh, Really?

Yeah, killing the cockroaches in that place of yours.

-Son of a beehatch. Kiss my tuchas.

Schwarzman, who said four months ago that he pays an effective personal income tax rate of 53 percent, has been less forthcoming. Blackstone, the world's biggest private-equity firm, is reducing its voting rights in BankUnited Inc. by converting some shares so that Schwarzman doesn't have to disclose his financial information to the U.S. Federal Reserve, a person familiar with the plans said earlier this month. ~FTA

Aw, isn't that cute, he doesn't want to be caught being a liar and a douchebag at the same time.

In before idiots claim that private equity firm's business model is to drive healthy companies into bankruptcy. Because of course, if they did that as frequently as idiots think nobody would give them a loan (why would they make loans to an industry who's plan is to default on such loans?), investors wouldn't invest (they don't get returns out of bankrupt companies - and nobody would buy stock in PE IPOs if they went bankrupt) and the industry would go away.

CPennypacker: In before all the people who are going to claim private equity firms save jobs because they save companies, despite the fact that they buy healthy companies and then use their assets as collateral for low interest borrowing, fire a big chunk of the employees to create "value," sell off the firm at a profit due to the inflated value of the stock from that new "value," then watch the company go bankrupt 8-10 years after they bought it.

Doh!!! Too late!

Debeo Summa Credo: In before idiots claim that private equity firm's business model is to drive healthy companies into bankruptcy. Because of course, if they did that as frequently as idiots think nobody would give them a loan (why would they make loans to an industry who's plan is to default on such loans?), investors wouldn't invest (they don't get returns out of bankrupt companies - and nobody would buy stock in PE IPOs if they went bankrupt) and the industry would go away.

CPennypacker: In before all the people who are going to claim private equity firms save jobs because they save companies, despite the fact that they buy healthy companies and then use their assets as collateral for low interest borrowing, fire a big chunk of the employees to create "value," sell off the firm at a profit due to the inflated value of the stock from that new "value," then watch the company go bankrupt 8-10 years after they bought it.

Doh!!! Too late!

Oh look, its this again

yert: Tingle007: CPennypacker: In before all the people who are going to claim private equity firms save jobs because they save companies, despite the fact that they buy healthy companies and then use their assets as collateral for low interest borrowing, fire a big chunk of the employees to create "value," sell off the firm at a profit due to the inflated value of the stock from that new "value," then watch the company go bankrupt 8-10 years after they bought it.

Safe!

Yup, staples is so broke right now, and dominoes.

Without private equity these firms would have been bankrupt anyway. These firms don' buy healthy companies they buy companies months away from bankruptcy. Sometimes firms are going to die, sometimes they can be saved other times it's to late.

Liberals don't understand how business works. They think you should always hire more no matter how little a client base you have and the government is made of magic that makes everything better.

Right so if we lower taxes the job creators they will create jobs because lower taxes means they will spend their money creating jobs in companies that have no client base.

Unfortunately, logic is useless against derp.

CPennypacker: Debeo Summa Credo: In before idiots claim that private equity firm's business model is to drive healthy companies into bankruptcy. Because of course, if they did that as frequently as idiots think nobody would give them a loan (why would they make loans to an industry who's plan is to default on such loans?), investors wouldn't invest (they don't get returns out of bankrupt companies - and nobody would buy stock in PE IPOs if they went bankrupt) and the industry would go away.

CPennypacker: In before all the people who are going to claim private equity firms save jobs because they save companies, despite the fact that they buy healthy companies and then use their assets as collateral for low interest borrowing, fire a big chunk of the employees to create "value," sell off the firm at a profit due to the inflated value of the stock from that new "value," then watch the company go bankrupt 8-10 years after they bought it.

Doh!!! Too late!

Oh look, its this again

Faith is a powerful thing, whether it is faith in a god or faith in the inherent nobility of the wealthy.

Philip Francis Queeg: CPennypacker: Debeo Summa Credo: In before idiots claim that private equity firm's business model is to drive healthy companies into bankruptcy. Because of course, if they did that as frequently as idiots think nobody would give them a loan (why would they make loans to an industry who's plan is to default on such loans?), investors wouldn't invest (they don't get returns out of bankrupt companies - and nobody would buy stock in PE IPOs if they went bankrupt) and the industry would go away.

CPennypacker: In before all the people who are going to claim private equity firms save jobs because they save companies, despite the fact that they buy healthy companies and then use their assets as collateral for low interest borrowing, fire a big chunk of the employees to create "value," sell off the firm at a profit due to the inflated value of the stock from that new "value," then watch the company go bankrupt 8-10 years after they bought it.

Doh!!! Too late!

Oh look, its this again

Faith is a powerful thing, whether it is faith in a god or faith in the inherent nobility of the wealthy.

He's confusing "what PE's goal is" with "what PE firms do"

And its very easy to get loans when you are securing them with hard assets as collateral.

Debeo Summa Credo: In before idiots claim that private equity firm's business model is to drive healthy companies into bankruptcy. Because of course, if they did that as frequently as idiots think nobody would give them a loan (why would they make loans to an industry who's plan is to default on such loans?), investors wouldn't invest (they don't get returns out of bankrupt companies - and nobody would buy stock in PE IPOs if they went bankrupt) and the industry would go away.

CPennypacker: In before all the people who are going to claim private equity firms save jobs because they save companies, despite the fact that they buy healthy companies and then use their assets as collateral for low interest borrowing, fire a big chunk of the employees to create "value," sell off the firm at a profit due to the inflated value of the stock from that new "value," then watch the company go bankrupt 8-10 years after they bought it.

A PE's gotta make money just like the people that hire them (CorpCo, Inc).

They will make money regardless - CorpCo, Inc. pays them to analyze and break up/sell off/streamline/reform/whatever else, and the PE firm walks away with checks.

If CorpCo, Inc. follows their advice? Hopefully, they rebound. If they do, that's great. If not, does the PE firm have to give back those fees? No?

Then they don't really have a vested interest in saving the company beyond doing their jobs honestly for the 6 months (or whatever) that they're working with CorpCo. After that, they'd gladly help CorpCo's biggest competitor (Conglomerated Consolidations) destroy every dollar CorpCo has ever touched.

// not a businessman

Dr Dreidel: Debeo Summa Credo: In before idiots claim that private equity firm's business model is to drive healthy companies into bankruptcy. Because of course, if they did that as frequently as idiots think nobody would give them a loan (why would they make loans to an industry who's plan is to default on such loans?), investors wouldn't invest (they don't get returns out of bankrupt companies - and nobody would buy stock in PE IPOs if they went bankrupt) and the industry would go away.

CPennypacker: In before all the people who are going to claim private equity firms save jobs because they save companies, despite the fact that they buy healthy companies and then use their assets as collateral for low interest borrowing, fire a big chunk of the employees to create "value," sell off the firm at a profit due to the inflated value of the stock from that new "value," then watch the company go bankrupt 8-10 years after they bought it.

A PE's gotta make money just like the people that hire them (CorpCo, Inc).

They will make money regardless - CorpCo, Inc. pays them to analyze and break up/sell off/streamline/reform/whatever else, and the PE firm walks away with checks.

If CorpCo, Inc. follows their advice? Hopefully, they rebound. If they do, that's great. If not, does the PE firm have to give back those fees? No?

Then they don't really have a vested interest in saving the company beyond doing their jobs honestly for the 6 months (or whatever) that they're working with CorpCo. After that, they'd gladly help CorpCo's biggest competitor (Conglomerated Consolidations) destroy every dollar CorpCo has ever touched.

// not a businessman

Actually thats what consulting firms do. Bain got checks for that too.

CPennypacker: Philip Francis Queeg: CPennypacker: Debeo Summa Credo: In before idiots claim that private equity firm's business model is to drive healthy companies into bankruptcy. Because of course, if they did that as frequently as idiots think nobody would give them a loan (why would they make loans to an industry who's plan is to default on such loans?), investors wouldn't invest (they don't get returns out of bankrupt companies - and nobody would buy stock in PE IPOs if they went bankrupt) and the industry would go away.

CPennypacker: In before all the people who are going to claim private equity firms save jobs because they save companies, despite the fact that they buy healthy companies and then use their assets as collateral for low interest borrowing, fire a big chunk of the employees to create "value," sell off the firm at a profit due to the inflated value of the stock from that new "value," then watch the company go bankrupt 8-10 years after they bought it.

Doh!!! Too late!

Oh look, its this again

Faith is a powerful thing, whether it is faith in a god or faith in the inherent nobility of the wealthy.

He's confusing "what PE's goal is" with "what PE firms do"

And its very easy to get loans when you are securing them with hard assets as collateral.

His notion that banks wouldn't ever give bad loans is just special. Bless his heart.

CPennypacker: Philip Francis Queeg: CPennypacker: Debeo Summa Credo: In before idiots claim that private equity firm's business model is to drive healthy companies into bankruptcy. Because of course, if they did that as frequently as idiots think nobody would give them a loan (why would they make loans to an industry who's plan is to default on such loans?), investors wouldn't invest (they don't get returns out of bankrupt companies - and nobody would buy stock in PE IPOs if they went bankrupt) and the industry would go away.

CPennypacker: In before all the people who are going to claim private equity firms save jobs because they save companies, despite the fact that they buy healthy companies and then use their assets as collateral for low interest borrowing, fire a big chunk of the employees to create "value," sell off the firm at a profit due to the inflated value of the stock from that new "value," then watch the company go bankrupt 8-10 years after they bought it.

Doh!!! Too late!

Oh look, its this again

Faith is a powerful thing, whether it is faith in a god or faith in the inherent nobility of the wealthy.

He's confusing "what PE's goal is" with "what PE firms do"

"What PE firms do" is what drives their ability to obtain financing for their transactions, and their ability to find investors for their funds. If PE firms routinely (intentionally or not), drove their target companies into bankruptcy, resulting in losses for lenders and their investors, they wouldn't get any more loans or investments. This is incredibly easy to understand and intuitive. Are you being dishonest or do you just fundamentally lack understanding of the PE industry?

And its very easy to get loans when you are securing them with hard assets as collateral.

Yeah, to the extent you have hard unencumbered assets. If you are buying a company at 1.5x book value, and only 1/2 of the book value is collateralizable assets, then you still have to come up with the 1.0x book value somewhere else, either in equity or in unsecured debt.

The private equity industry is legalized fraud.

A company like Bain can perform leveraged buyouts of many firms. Bain takes out a loan to buy the company. Then Bain claims that the debt is actually that of each company that Bain acquires, not Bain's. Cute trick, don't you think?

If the company goes bankrupt, Bain gets to ignore the loss. It's all on the shoulders of the employees, who lose their jobs and any pensions, and the legitimate lenders. If the company remains in business despite being squeezed by a private equity company, such as Bain, the profits are taken as carried interest and taxed very favorably.

It's a classic heads I win tails you lose game.

Philip Francis Queeg: CPennypacker: Philip Francis Queeg: CPennypacker: Debeo Summa Credo: In before idiots claim that private equity firm's business model is to drive healthy companies into bankruptcy. Because of course, if they did that as frequently as idiots think nobody would give them a loan (why would they make loans to an industry who's plan is to default on such loans?), investors wouldn't invest (they don't get returns out of bankrupt companies - and nobody would buy stock in PE IPOs if they went bankrupt) and the industry would go away.

CPennypacker: In before all the people who are going to claim private equity firms save jobs because they save companies, despite the fact that they buy healthy companies and then use their assets as collateral for low interest borrowing, fire a big chunk of the employees to create "value," sell off the firm at a profit due to the inflated value of the stock from that new "value," then watch the company go bankrupt 8-10 years after they bought it.

Doh!!! Too late!

Oh look, its this again

Faith is a powerful thing, whether it is faith in a god or faith in the inherent nobility of the wealthy.

He's confusing "what PE's goal is" with "what PE firms do"

And its very easy to get loans when you are securing them with hard assets as collateral.

His notion that banks wouldn't ever give bad loans is just special. Bless his heart.

My notion is that banks wouldn't ever intentionally give bad loans. And if the PE industry routinely defaulted on their debt, then why would banks continue to make loans? Why would investors still buy their bonds? Why would pension funds, insurance companies, university endowments, wealthy individuals or other sophistocated investors continue to invest money in PE funds?

The American public has the attention span of a newt.

Debeo Summa Credo: My notion is that banks wouldn't ever intentionally give bad loans.

I just want everyone to read this statement again. Then think about the recent financial crisis.

You may now commence laughing. Crying is optional.

Delay: The private equity industry is legalized fraud.

A company like Bain can perform leveraged buyouts of many firms. Bain takes out a loan to buy the company. Then Bain claims that the debt is actually that of each company that Bain acquires, not Bain's. Cute trick, don't you think?

If the company goes bankrupt, Bain gets to ignore the loss. It's all on the shoulders of the employees, who lose their jobs and any pensions, and the legitimate lenders.

Sigh. The lenders know exactly who is liable for the debt when they make the loan. They know full well that XYZ Acquisition Co is the obligor under the loan, and that if they cant pay then the lender can't go into Mitt Romney's pocket for it. They lender then factors this into the price of the loan.

Why is it fraud when both parties know exactly what is going on before they sign?

Philip Francis Queeg: Debeo Summa Credo: My notion is that banks wouldn't ever intentionally give bad loans.

I just want everyone to read this statement again. Then think about the recent financial crisis.

You may now commence laughing. Crying is optional.

Pointing out the dumbness of corporate shills is class warfare.

Debeo Summa Credo: "What PE firms do" is what drives their ability to obtain financing for their transactions, and their ability to find investors for their funds. If PE firms routinely (intentionally or not), drove their target companies into bankruptcy, resulting in losses for lenders and their investors, they wouldn't get any more loans or investments. This is incredibly easy to understand and intuitive. Are you being dishonest or do you just fundamentally lack understanding of the PE industry?

Wait, you think I mean they are driving companies into bankruptcy while they still own them? You're really confident in your knowledge of the industry, so confident that its making you act like a condescending jackass. You have some knowledge but you are completely misreading what I'm saying about it and overlooking the effects that the transactions can have. Why do you defend it so vehemently? Privat eEquity firms operate to make money FOR THEIR INVESTORS. Period. Sometimes their changes help a firm in the long run. Sometimes they hurt them. Neither of them are intended because once the PE firm cashes out they could give less than a shiat what happens.

And its very easy to get loans when you are securing them with hard assets as collateral.

Yeah, to the extent you have hard unencumbered assets. If you are buying a company at 1.5x book value, and only 1/2 of the book value is collateralizable assets, then you still have to come up with the 1.0x book value somewhere else, either in equity or in unsecured debt.

Right, fine, but two of the major target points for a LBO are value priced stock and significant amounts of hard assets.

CPennypacker: Debeo Summa Credo: In before idiots claim that private equity firm's business model is to drive healthy companies into bankruptcy. Because of course, if they did that as frequently as idiots think nobody would give them a loan (why would they make loans to an industry who's plan is to default on such loans?), investors wouldn't invest (they don't get returns out of bankrupt companies - and nobody would buy stock in PE IPOs if they went bankrupt) and the industry would go away.

CPennypacker: In before all the people who are going to claim private equity firms save jobs because they save companies, despite the fact that they buy healthy companies and then use their assets as collateral for low interest borrowing, fire a big chunk of the employees to create "value," sell off the firm at a profit due to the inflated value of the stock from that new "value," then watch the company go bankrupt 8-10 years after they bought it.

Doh!!! Too late!

Oh look, its this again

Yep. I hate having my stuff read and then analyzed with the worst case scenario for each subset of the subject and then rehashed as if I said something that isn't even a reasonable reinterpretation of the initial comment.

It's the Skip Bayless of poster styles.
\don't be a douchebag, Skip Credo

Philip Francis Queeg: Debeo Summa Credo: My notion is that banks wouldn't ever intentionally give bad loans.

I just want everyone to read this statement again. Then think about the recent financial crisis.

You may now commence laughing. Crying is optional.

It just amazes me that people like you think that, say, Vikram Pandit, or the CEO of Washington Mutual, knew that they were writing a shiatload of loans in 2006 that would eventually go bad and force them to, in Citi's case, get a $40b loan from the federal government (while savaging their stock price and Pandit's personal wealth), or in Washinto Mutual's case be the end of the bank.

Do you realize how amazingly stupid that sounds? Banks were writing loans while upper management was saying "oh yeah, this is going to fark us over in a few years. I can't wait to go bankrupt."

Debeo Summa Credo: Why is it fraud when both parties know exactly what is going on before they sign?

Because, as the article points out, the folks that put their money into the deal, such as the employees in the pension fund, are limited partners and by definition have no idea what's going on.

My company was acquired by a private equity firm after decades of small-ownership (original owner died, board voted to sell to PE Firm).

Should I be worried about my job?

MithrandirBooga: My company was acquired by a private equity firm after decades of small-ownership (original owner died, board voted to sell to PE Firm).

Should I be worried about my job?

Depends on how and why your company was purchased. There are different kinds of private equity transactions.

MithrandirBooga: My company was acquired by a private equity firm after decades of small-ownership (original owner died, board voted to sell to PE Firm).

Should I be worried about my job?

Yes

Debeo Summa Credo: Philip Francis Queeg: Debeo Summa Credo: My notion is that banks wouldn't ever intentionally give bad loans.

I just want everyone to read this statement again. Then think about the recent financial crisis.

You may now commence laughing. Crying is optional.

It just amazes me that people like you think that, say, Vikram Pandit, or the CEO of Washington Mutual, knew that they were writing a shiatload of loans in 2006 that would eventually go bad and force them to, in Citi's case, get a $40b loan from the federal government (while savaging their stock price and Pandit's personal wealth), or in Washinto Mutual's case be the end of the bank.

Do you realize how amazingly stupid that sounds? Banks were writing loans while upper management was saying "oh yeah, this is going to fark us over in a few years. I can't wait to go bankrupt."

As I've said before your deep faith in the wisdom and inherent nobility of the wealthy and of corporate executives is touching. Incredibly naive, and contrary to the facts, but very touching.

Where you go wrong is when you miss that the discusssion actually goes ""oh yeah, this is going to fark us over in a few years. But if we pump up the current numbers I'll get another bonus that is more than I can reasonably spend in my lifetime. I don't give a flying fark if the bank eventually goes bankrupt."

CPennypacker: A PE's gotta make money just like the people that hire them (CorpCo, Inc).

They will make money regardless - CorpCo, Inc. pays them to analyze and break up/sell off/streamline/reform/whatever else, and the PE firm walks away with checks.

If CorpCo, Inc. follows their advice? Hopefully, they rebound. If they do, that's great. If not, does the PE firm have to give back those fees? No?

Then they don't really have a vested interest in saving the company beyond doing their jobs honestly for the 6 months (or whatever) that they're working with CorpCo. After that, they'd gladly help CorpCo's biggest competitor (Conglomerated Consolidations) destroy every dollar CorpCo has ever touched.

// not a businessman

Actually thats what consulting firms do. Bain got checks for that too.

What is? Torching every business on the block because they paid you to "reorg" or "streamline" or "cut costs"? (I'm asking because, knowing next to 0 about business, I want to know if I've got a good handle on things.)

And Debeo, I think what you're missing is that PEs make money for the people that pay them - nominally, it's the business that pays them and the business as a whole that would benefit, but you, me and Dupree all know that it's the owner(s)/board will make money regardless of how the business does. Sometimes, the owner(s)/board will make money even as the employees get screwed out of pensions, jobs, etc.

Maybe the owner(s)/board would have made more in the long-term by keeping the business afloat as it was (and be happy with 6% returns every quarter instead of shooting for 10%+), but filing Chapter 11 hasn't stopped many successful people from running "profitable" business after "profitable" business.

// profitable for them as owners, that is

CPennypacker: Debeo Summa Credo: "What PE firms do" is what drives their ability to obtain financing for their transactions, and their ability to find investors for their funds. If PE firms routinely (intentionally or not), drove their target companies into bankruptcy, resulting in losses for lenders and their investors, they wouldn't get any more loans or investments. This is incredibly easy to understand and intuitive. Are you being dishonest or do you just fundamentally lack understanding of the PE industry?

Wait, you think I mean they are driving companies into bankruptcy while they still own them? You're really confident in your knowledge of the industry, so confident that its making you act like a condescending jackass. You have some knowledge but you are completely misreading what I'm saying about it and overlooking the effects that the transactions can have. Why do you defend it so vehemently? Privat eEquity firms operate to make money FOR THEIR INVESTORS. Period. Sometimes their changes help a firm in the long run. Sometimes they hurt them. Neither of them are intended because once the PE firm cashes out they could give less than a shiat what happens.

"Condescending jackass" - I'm being called a corporate shill left and right just for trying to correct some blatant misconceptions regarding finance.

I agree with you that PE firms are trying to make money for themselves and their investors. Of course, that is what anyone is doing. Corporations are run to maximize value to the shareholder. Private companies are generally run to optimize income to the owner, unless he or she is feeling generous and wants to pay people more than a market wage or wants to charge less than market prices for services/goods provided.

Regarding bankruptcy after selling the IPO, to some extent the original market logic applies. If the PE firm loads one of its portfolio companies with debt, the lenders know exactly what assets/entities are backing that debt. So they consider the possibility of getting paid back on time whether the company is still owned by the PE firm or not.

And, when a PE firms sells an investment, the people buying into it analyze the company and its debt load before deciding whether to invest. If a PE firm loaded a company with debt, sold off the most productive assets, and tried to IPO it, investors would see that and not want to buy into the IPO or force the price downward, lowering returns to the PE fund.

You'll not hear me argue that PE firms are good for the employees of their target companies. I suppose you can make an argument that PE unlocks value in their target companies, improving the overally efficiency of capital in the economy, but in general some of that unlocked value comes from improving an ineffecient workforce, meaning excess employees are laid off and other employees have to do more.

I'm just trying to dispel the notion that PE operates on a 'pillage and burn' model. To do so would result in losses for the lenders and investors that PE needs to operate.

Dinki: Debeo Summa Credo: In before idiots claim that private equity firm's business model is to drive healthy companies into bankruptcy. Because of course, if they did that as frequently as idiots think nobody would give them a loan (why would they make loans to an industry who's plan is to default on such loans?), investors wouldn't invest (they don't get returns out of bankrupt companies - and nobody would buy stock in PE IPOs if they went bankrupt) and the industry would go away.

You really have no clue on what private equity firms do, do you? Their sole purpose is to make money for themselves and their investors. When they buy a company, they don't give a shiat whether the company thrives or collapses- all they care about is what is they most efficient way to make money off that company. And frankly, if they were interested in anything else they wouldn't be in business very long. So if saving a company is the best, most efficient way to get a good return on their investment, they will do that. But if raiding the company, loading it up on debt, and dumping it off makes better economic sense they will just as quickly do that.

How are they going to dump it off if its been raided and loaded up with debt? How much is someone going to pay them for the wrecked shell? Who is going to loan to a company that is not worth saving? If a company is worth $100m (agreed to price between PE firm and previous owner), how much do you think that company will be worth after whatever useful assets it owns have been 'raided'? How much do you think you'll be able to borrow agains such a company?


And the notion that banks won't lend to them is complete BS- the bank doesn't care how the private equity firm makes it's money- they only care about how the PE firm itself is performing. If it does well by saving companies, than fine. If it does well by destroying companies, well that's fine too.

The bank cares whether it gets its money back. And as we've discussed upthread, oftentimes on loans made for buyouts the obligor is the bought out company - if its "raided" and left for dead how will it pay back the bank?

They will continue to loot us of our nations resources until they are all gone and the money from those resources is in the pockets of the top .1%.

They have the money to pay the salaries of countless shills.

I don't fully understand this and people are making money while I am not so I am against it.

Delay: Debeo Summa Credo: Why is it fraud when both parties know exactly what is going on before they sign?

Because, as the article points out, the folks that put their money into the deal, such as the employees in the pension fund, are limited partners and by definition have no idea what's going on.

Okay, last post and I have to take off.

Of course the members of steamfitters local 1132 or public school teachers in California, or whatever other pension plan members you can mention don't know what is going on, but every pension fund hires an investment manager who does, and who is evaluated on their performance.

Calpers, the california state employee pension fund, is one of the biggest institutioal investors in the world. They have boatloads of investment managers determining their optimal mix - fixed income, equity allocation, and PE funds, etc. They do research into PE funds historical performance and are indeed, sophisticated investors who know what the contractual terms are before they invest.

Harvard has like $30billion in endowments and is run by a crew of brilliant investors including Mohamad El-Arian.

Smaller pension funds my outsource their investment management to a third party investment manager, but the manager is assessed on performance so they are incented to maximize returns, obviously.

Philip Francis Queeg: His notion that banks wouldn't ever give bad loans is just special. Bless his heart.

He also thinks homeowners were responsible for the financial crisis. Banks are above reproach.

Debeo Summa Credo: Dinki: Debeo Summa Credo: In before idiots claim that private equity firm's business model is to drive healthy companies into bankruptcy. Because of course, if they did that as frequently as idiots think nobody would give them a loan (why would they make loans to an industry who's plan is to default on such loans?), investors wouldn't invest (they don't get returns out of bankrupt companies - and nobody would buy stock in PE IPOs if they went bankrupt) and the industry would go away.

You really have no clue on what private equity firms do, do you? Their sole purpose is to make money for themselves and their investors. When they buy a company, they don't give a shiat whether the company thrives or collapses- all they care about is what is they most efficient way to make money off that company. And frankly, if they were interested in anything else they wouldn't be in business very long. So if saving a company is the best, most efficient way to get a good return on their investment, they will do that. But if raiding the company, loading it up on debt, and dumping it off makes better economic sense they will just as quickly do that.

How are they going to dump it off if its been raided and loaded up with debt? How much is someone going to pay them for the wrecked shell? Who is going to loan to a company that is not worth saving? If a company is worth $100m (agreed to price between PE firm and previous owner), how much do you think that company will be worth after whatever useful assets it owns have been 'raided'? How much do you think you'll be able to borrow agains such a company?


And the notion that banks won't lend to them is complete BS- the bank doesn't care how the private equity firm makes it's money- they only care about how the PE firm itself is performing. If it does well by saving companies, than fine. If it does well by destroying companies, well that's fine too.

The bank cares whether it gets its money back. And as we've discussed upthread, oftentimes on loans made for buyouts the obligor is the bought out company - if its "raided" and left for dead how will it pay back the bank?

The loans are backed by the assets of the company: the land, the buildings, the machines, ect. When the company fails the bank tanks ownership of the collateral and then sells it. The "investors" take all the company's cash assets, including the loans and any pension funds; the banks take all the hard assets; and the employees get the shaft.