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Originally Posted by Adak
"Fucking the working man"? Are you out of your mind? Romney's company turned around companies, and in the process, saved or created a lot of jobs. Yes, not every company was able to be turned around, because of market conditions that developed - but in business, nothing is guaranteed except change.
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Do you even know what Romney's company did (does)? Even a hint of a clue about what a LBO is?
He may have started out the way you describe, keeping companies like Staples alive and helping them flourish, but he veered away from that when he figured out the real money was in taking over companies, loading them up with debt, squeezing exorbitant fees from them and then dumping the broken husk in the end.
Greed and Debt
For those that don't want to dig through that long article, here is a description of how it works:
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A private equity firm like Bain typically seeks out floundering businesses with good cash flows. It then puts down a relatively small amount of its own money and runs to a big bank like Goldman Sachs or Citigroup for the rest of the financing. (Most leveraged buyouts are financed with 60 to 90 percent borrowed cash.) The takeover firm then uses that borrowed money to buy a controlling stake in the target company, either with or without its consent. When an LBO is done without the consent of the target, it's called a hostile takeover; such thrilling acts of corporate piracy were made legend in the Eighties, most notably the 1988 attack by notorious corporate raiders Kohlberg Kravis Roberts against RJR Nabisco, a deal memorialized in the book Barbarians at the Gate.
Romney and Bain avoided the hostile approach, preferring to secure the cooperation of their takeover targets by buying off a company's management with lucrative bonuses. Once management is on board, the rest is just math. So if the target company is worth $500 million, Bain might put down $20 million of its own cash, then borrow $350 million from an investment bank to take over a controlling stake.
But here's the catch. When Bain borrows all of that money from the bank, it's the target company that ends up on the hook for all of the debt.
Now your troubled firm – let's say you make tricycles in Alabama – has been taken over by a bunch of slick Wall Street dudes who kicked in as little as five percent as a down payment. So in addition to whatever problems you had before, Tricycle Inc. now owes Goldman or Citigroup $350 million. With all that new debt service to pay, the company's bottom line is suddenly untenable: You almost have to start firing people immediately just to get your costs down to a manageable level.
"That interest," says Lynn Turner, former chief accountant of the Securities and Exchange Commission, "just sucks the profit out of the company."
Fortunately, the geniuses at Bain who now run the place are there to help tell you whom to fire. And for the service it performs cutting your company's costs to help you pay off the massive debt that it, Bain, saddled your company with in the first place, Bain naturally charges a management fee, typically millions of dollars a year. So Tricycle Inc. now has two gigantic new burdens it never had before Bain Capital stepped into the picture: tens of millions in annual debt service, and millions more in "management fees." Since the initial acquisition of Tricycle Inc. was probably greased by promising the company's upper management lucrative bonuses, all that pain inevitably comes out of just one place: the benefits and payroll of the hourly workforce.
Once all that debt is added, one of two things can happen. The company can fire workers and slash benefits to pay off all its new obligations to Goldman Sachs and Bain, leaving it ripe to be resold by Bain at a huge profit. Or it can go bankrupt – this happens after about seven percent of all private equity buyouts – leaving behind one or more shuttered factory towns. Either way, Bain wins. By power-sucking cash value from even the most rapidly dying firms, private equity raiders like Bain almost always get their cash out before a target goes belly up.
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"That was not his or Bain's or the industry's primary objective. The objective of the LBO business is maximizing returns for investors." When it comes to private equity, American workers – not to mention their families and communities – simply don't enter into the equation.
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So don't try to sell him to ME as a shining white knight, come along to help poor KB's Toys -
KB Toys . Many companies were metaphorically burned to the ground and many individuals lost their jobs so Bain and their investors could get richer.
This is a man whose knowledge lies in making the rich richer, not in helping to create jobs. I have no doubt that, if he should be elected President, he and his wealthy friends will benefit enormously. And it will be on the backs of the poorest and most vulnerable of our citizens.
Why do I think this? Oh maybe because of Global Tech.
Global-Tech:Betting Against American Workers
Profits > everything. A President who believes this will not protect our citizens...the very idea is frightening and chilling.
Oh and Hannity and Limbaugh? They work for Clear Channel, which is owned by Bain Capital. Just FYI...
