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View Diary: Stockman: Romney and Bain Were About Stripping Cash Out Of Companies For Themselves, Not About Jobs (179 comments)

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  •  Bain can't be confused w/ venture capitalism (20+ / 0-)

    Except in limited circumstances (as in the case of Staples), they didn't invest w/ the intention of growing companies. Growth was not pertinent, profit was the objective. In fact, venture capitalists like w/ those who initially invested in FB (the SF financier in the movie) actually did so because they wanted the company to grow and they wanted to be part of that growth. OTOH, Bain practiced vampire capitalism, identifying health company lines of credit, and drain that money through management fees and other schemes until there was no money left and the company was exsanguinated.

    •  Dirk - Bain made its really big gains (1+ / 0-)
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      not on companies that were exsanguinated, but rather those who were sold to new investors, or the public market, and worth many times what Bain Capital paid for its shares. In BC's best deals the employee headcount grew. In companies which were exsanguinated the returns are low or negative, they aren't the home runs.

      "let's talk about that"

      by VClib on Wed May 23, 2012 at 11:14:33 AM PDT

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      •  OK VClib, you have to provide examples of (5+ / 0-)

        BC's best deals resulting in employee headcount growing.

        This I gotta see.

        Romney - his fingernails have never been anything but manicured.

        by Pescadero Bill on Wed May 23, 2012 at 11:38:11 AM PDT

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        •  Tick tick tick (9+ / 0-)

          There are venture capital firms that restructure or grow businesses and sell out once the businesses are up and running well.  That does not seem to have been Bain's M.O. from what I've read.  They're more the folks who run up the corporate credit cards to the max, then grab all the money pull out, leaving the bills to the hapless employees.

          When Free Speech is outlawed, only outlaws will have Free Speech.

          by Dallasdoc on Wed May 23, 2012 at 12:02:39 PM PDT

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        •  Bill - I may have access to (3+ / 0-)

          really detailed information on the Bain Capital historical portfolio performance, with company specific information. I am on the track to see if I can see it. It is highly proprietary and I don't think I will be able to copy it. If I can gain access to it I'll write a diary. It will show me which portfolio companies provided the highest rates of return and I should be able to tell if the returns were driven by growth or financial engineering.

          I know partners in the private equity business and how the model really works, which isn't much like how it has been described here. There is no doubt that the goal of PE is to make money for their investors because that's the only way a PE firm stays in business, and Bain Capital has been in business a long time. Some PE firms focus on chop shop structures, but the upside of that strategy is limited. What PE companies want to do is grow predictable cash flow, that's what drives value and exit prices. There is also no doubt that PE firms have no concern for employees, but in growth situations that headcounts do grow.

          "let's talk about that"

          by VClib on Wed May 23, 2012 at 12:42:22 PM PDT

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          •  And this is what we are really talking about: (0+ / 0-)
            There is also no doubt that PE firms have no concern for employees

            202-224-3121 to Congress in D.C. USE it! You can tell how big a person is by what it takes to discourage them. "We're not perfect, but they're nuts."--Barney Frank 01/02/2012

            by cany on Wed May 23, 2012 at 02:11:04 PM PDT

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            •  cany - that's true for nearly all investors (6+ / 0-)

              This is not something unique to private equity. Investors, in the public market or private equity, look to the executives to manage employees and look out for the employees interests. I think it is very rare when investors deal directly with employee issues. I think what most people don't realize is that Bain Capital, or any other private equity fund, doesn't actually manage companies directly. They typically have a majority of the board of directors, but do not deal in day-to-day issues, that is managed by the senior executives who are not employees of the private equity fund, they are the mangers and employees of the business.  When private equity funds purchase a company they are the new owners, with all the rights and legal responsibilities as any other owner.  

              "let's talk about that"

              by VClib on Wed May 23, 2012 at 03:50:19 PM PDT

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              •  We are all saying the same thing, Bain was not a (1+ / 0-)
                Recommended by:
                Pescadero Bill

                job creator and neither was Romney, creating jobs is a byproduct of the drive to make money.  In some cases, it requires a reduction of headcount and in some cases it requires additions but usually as few as possible so that the PE firm can make as much money as possible.  

                •  lhl - I would quibble with you last sentence (0+ / 0-)

                  PE owners are happy to add as many employees as possible as long as it improves cash flow. In a big company finding the magic number, or correct mix, is often difficult, and there is no doubt that PE firms are always looking to reduce costs.

                  "let's talk about that"

                  by VClib on Wed May 23, 2012 at 08:43:40 PM PDT

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              •  The perspective of the ownership class in this (0+ / 0-)

                debate is inconsequential to those of us fighting to humanize our economic paradigm. That is, other then that it points out the dehumanizing process.

                Thanks VClib for your thoughtful and well structured comments, but they're coming way too close to justifying even promoting Romney's position for my taste.

                Romney - his fingernails have never been anything but manicured.

                by Pescadero Bill on Wed May 23, 2012 at 08:54:41 PM PDT

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      •  Why businesses exist (15+ / 0-)

        Businesses exist for a number of reasons. Some go into business to pursue a dream or passion. Like Apple or Ben and Jerry's. Some build a business to make money but do not feel any real passion for anything but starting up new business. Republicans created a meme that argues that business is altruistic in nature and exists for the sole purpose of employing workers.

        We have lionized "entrapanuers" into heroes. They are not. Business hires and fires based on staffing needs in response to demand. Nobody hires anybody unless they need more help. Demand drives hiring, not taxes or government regulation or policy. And the idea that American business is waiting for Obama to preserve the Bush tax cuts and then ride to the rescue is laughable at best.

        Bain made money by buying companies loading them up with debt keeping the borrowed money for themselves and then walking away in bankruptcy procedings. It is not very different from the movie Good Fellas where the mob buys a restaurant, loots its assets, borrows to the hilt and when it is squeezed out completely torches the building for the insurance money.  

        •  kmackle - I doubt that's how Bain C. made most (0+ / 0-)

          of it's money. I don't have any idea what percent of Bain C's portfolio companies went bankrupt versus those who were sold to new owners as functioning businesses, and I image you don't have any real data either. The returns available on companies that end up in bankruptcy are a fraction of those available when sold as successful, profitable businesses. I don't think Bain C would have the track record that it has if a high percentage of their portfolio companies went bankrupt. Private equity funds have portfolio companies that loose money and have entire funds that have negative returns. If it was as easy as you suggest to make money on every deal, even those investments that go south, the industry's recent record of returns would be much better.  

          "let's talk about that"

          by VClib on Wed May 23, 2012 at 12:59:04 PM PDT

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          •  You don't know, he doesn't know (0+ / 0-)

            And so your comment is intended to do what? Educate? Misdirect? Propagandize?

            Neither desired nor required.

            You're not the only one, but one of the most persistent and insistent.

            I will give you that.

            "What have you done for me, lately?" ~ Lady Liberty

            by ozsea1 on Wed May 23, 2012 at 04:26:30 PM PDT

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          •  VClib - I do not think you get my point (1+ / 0-)
            Recommended by:

            1. Demand drives hiring, no company hires unless they need extra help.

            2. You take the money out of the company first, then you declare corporate bankruptcy.

            3. Most deals does go south but it is the workers in the company that suffer from the decisions of the management.

            4. A buyout specialist may have a strong bottom line but if that strength comes from firing people then he has created real suffering without any personal cost.

            5. The private equity industry is  not inherently evil but there are a lot of bad actors in it. If the private equity industry refuses to clean itself up and reform then there needs to be punishing regulation.

            6. It seems to me that one of the most important trends in finance is to work the levers of government to the advantage of the wealthy. And there is a real sense of entitlement on the part of the new robber baron class who are so rude as to act as if they actually deserve what they have. And to demand more from the tax payer.

            7. If this trend continues our society is going to explode. There will be violence which I denounce in the strongest terms possible. Violence is evil and occurs when people feel they have no other choice and are backed into a corner. And while you spill all these platitudes about the markets and others talk about the economy in the abstract real people are suffering. And Mitt Romney and his friends do not care about this suffering at all.

            •  kmackle - you make some very valid points (1+ / 0-)
              Recommended by:

              However, your point #2 is just wrong. While it is certainly possible that PE funds have investments where they take their money off the table before companies go bankrupt, it does not happen all the time. PE funds have investments where the partnership's investment is lost. There are even entire PE funds who have negative returns, which would not be possible if in every case they could extract their investment before the company heads south.

              "let's talk about that"

              by VClib on Thu May 24, 2012 at 08:42:39 AM PDT

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          •  wonder no more (3+ / 0-)
            Recommended by:
            TomP, VClib, Sharon Wraight

            of the 77 companies Bain bought during Romney's tenure 30% went bust, 70% of Bain's profit came from just 10 deals and 4 of those companies wsj link here  wound up going through bankruptcy not long after being sold.

            Newt Gingrich: Believes marriage is between one man and a series of ever younger women. Wife #1 born ~ 1936, divorced when in her mid-40s...Wife #2 born ~1947, divorced when in her mid-40s...Wife #3 born ~1966.

            by trillian on Thu May 24, 2012 at 03:48:56 AM PDT

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        •  Exactly. My mom started a successful small (3+ / 0-)
          Recommended by:
          Dirtandiron, ozsea1, TomP

          business.  WHY?  To support herself and me.  There was absolutely NO other reason she did it.

          202-224-3121 to Congress in D.C. USE it! You can tell how big a person is by what it takes to discourage them. "We're not perfect, but they're nuts."--Barney Frank 01/02/2012

          by cany on Wed May 23, 2012 at 02:12:20 PM PDT

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      •  Think of all the banks I didn't rob! n/t (4+ / 0-)
        Recommended by:
        TomP, Matt Z, Southcoast Luna, Dirtandiron

        Don't let millionaires steal Social Security.
        I said, "Don't let millionaires steal Social Security!"

        by Leo in NJ on Wed May 23, 2012 at 12:20:41 PM PDT

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    •  Financial piracy (7+ / 0-)

      Romney and his ilk prey on the innocent, looting anything valuable in their lives for their own selfish gain and leaving wreckage strewn all about them.  If one of Romney's companies survived Bain and moved on to grow, that was almost certainly despite Bain's attentions rather than because of them.  

      When Free Speech is outlawed, only outlaws will have Free Speech.

      by Dallasdoc on Wed May 23, 2012 at 12:00:25 PM PDT

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    •  "Exsanguinate" (3+ / 0-)
      Recommended by:
      TomP, Dirtandiron, Cassandra Waites

      I learned a new word!


      Ceterum censeo Factionem Republicanam esse delendam.

      by journeyman on Wed May 23, 2012 at 12:10:39 PM PDT

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    •  The operative word is "fees" (5+ / 0-)

      which Romney expanded upon during his not-to-be-spoken-of term as governor.

      Rather than raising taxes, he assessed fees to everything that wasn't tied down to include proposing raising the fees for gun ownership.  Ouch.

      The no-taxes gang are deceitful and use tactics which continue to cost consumers just as Bain's fees drained the companies they preyed upon.

      When someone is impatient and says, "I haven't got all day," I always wonder, How can that be? How can you not have all day? George Carlin

      by msmacgyver on Wed May 23, 2012 at 12:49:11 PM PDT

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    •  As a co-founder of a startup company back... (4+ / 0-)
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      TomP, Sharon Wraight, JVolvo, Dirtandiron

      in the early 1990's, we ended up getting venture capital funds. The VC took a big chunk of stock and had veto power over all decisions but all the money he put in was at risk and he could have lost every penny. That's a totally different investor than the Bains of the world. Interestingly, the VC we dealt with was a fine man who cared about the people in our company and agonized when someone was let go. Obviously in stark contrast to RMoney.

      Just another faggity fag socialist fuckstick homosinner!

      by Ian S on Wed May 23, 2012 at 12:51:39 PM PDT

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