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View Diary: Private equity-owned Hostess blames striking workers as it liquidates (263 comments)

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  •  Not necessarily... (2+ / 0-)
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    DaveinBremerton, LostBuckeye

    The goal of private equity is not always to build a successful business, but to buy something cheaply, chop it up and make a profit, and move on.
    Whether or not another company steps in to fill the void makes no difference to these guys, they get their fix and then move on to the next deal. They don't have any real connection to the company itself, or it's product, only to the numbers on the ledger.
    As far as "staying in business" or "providing a service," they don't care. They move in, take profit, and move on to the next deal. They are not in it for long-term commitment.
    Buying companies, perhaps injecting a little capital at first, then destroying the whole thing when they can make maximum profit from doing so is what they do.

    See Gordon Gecko in Wall Street:
    Why did you wreck it? Because it was wreckable.

    Everybody got to elevate from the norm....

    by Icicle68 on Fri Nov 16, 2012 at 09:41:28 AM PST

    [ Parent ]

    •  It still requires a Bigger Fool (1+ / 0-)
      Recommended by:

      to buy up the wreckage.

      It's been a hundred years, isn't it time we stopped blaming Captain Smith for sinking the Titanic?

      by happymisanthropy on Fri Nov 16, 2012 at 12:07:42 PM PST

      [ Parent ]

      •  The wreckage is generally not sold as one piece (0+ / 0-)

        Equipment/land/buildings/stocked materials and etc. are not sold as a unit, but seperately to whomever will buy each of them.
        The American Taxpayer goes on the hook for part of the employees' pensions via the Pension Benefit Guarantee Fund.
        The private equity guys take the cash. And don't forget, those private equity guys borrowed a ton of money in the business' name, in the guise of "turning it around." Their names aren't on that debt, it belongs to the business.
        All of those parts (named above) are much easier to move individually than they are packaged in one bundle.

        Everybody got to elevate from the norm....

        by Icicle68 on Fri Nov 16, 2012 at 12:38:16 PM PST

        [ Parent ]

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