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View Diary: Is there anything legit about Bain? (19 comments)

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    Madoff's fraud lay in his "guarantee" of 20 percent pre-tax returns off of an awfully conservative option model.  He succeeded because he targeted a cloistered set of investors that were especially gullible.  The return on a leveraged buyout however requires first securing loans against the target firm (easier when financing is cheap, but still an obstacle to overcome) and then either retiring the debt or exiting while you can (neither of which is guaranteed).

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