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View Diary: Are you ready for Mitt Romney 2.0? (88 comments)

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  •  commonmass - Bain Capital does not do hostile (3+ / 0-)
    Recommended by:
    BelgianBastard, dougymi, Demi Moaned

    takeovers. There are private equity firms who do that, but it's rare. There are a very different class of investors, now typically structured as hedge funds, who do hostile takeovers. Bain Capital, and most other private equity firms, do negotiated purchases, working with existing management, board of directors, and major shareholders to buy companies.

    "let's talk about that" uid 92953

    by VClib on Wed Aug 27, 2014 at 03:19:42 PM PDT

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    •  Yes, but then they get hostile, saddle the company (8+ / 0-)

      with debt, extract its assets, and leave the taxpayers to bail out the pension fund for the workers.
      Am I wrong?

      You can't make this stuff up.

      by David54 on Wed Aug 27, 2014 at 03:39:01 PM PDT

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      •  That's a different business as well (0+ / 0-)

        The key to private equity is leverage. To have an institutional lender allow a fund to borrow 80% of the purchase price the company needs to be generating significant cash flow. There are funds that focus on buying companies to sell the pieces, but that's not what Bain Capital does, nor most other private equity funds. Now, at times deals go south and during a liquidation all assets that have value are sold, but those aren't the deals that make the big bucks for partners of private equity funds or their investors. Those are the deals where everyone loses money.

        "let's talk about that" uid 92953

        by VClib on Wed Aug 27, 2014 at 03:52:06 PM PDT

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        •  Not true. (6+ / 0-)

          Sorry, but Bain used the leveraged, saddle with debt, pay Bain huge management fees, sell a dead-man-walking company scam numerous times. Was it the only way they made money? No. But it was a standard play.

          I ride the wild horse .

          by BelgianBastard on Wed Aug 27, 2014 at 03:58:58 PM PDT

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          •  No, Bain Capital made their real money (6+ / 0-)

            on buying successful companies, making them more profitable and then selling them to a new group of investors or taking them public. They didn't make big bucks selling dead man walking shells of companies.

            I was able to see the results of every Bain Capital investment from the inception of the firm through the presidential election year of 2012. I imagine I am one of the few people who post here who has actually seen the results for each partnership, and each underlying portfolio company. Decades ago I managed the portfolio assets of a Fortune 500 company and still have friends in the portfolio management business. Because of all the attention of Bain Capital I was curious about the actual performance, down to the individual portfolio company level. One of my friends, who's company is a Bain Capital investor, allowed me to look at all the Bain Capital data on the condition that I keep the details confidential and not copy anything.

            The Obama campaign did a great job of demonizing private equity, Bain Capital, and Mitt Romney. Most of what was on the internet regarding Bain Capital wasn't true, or at least was badly distorted. That is not to say that I agree with BC's business practices or things that they have done. However, I do think that it was interesting that during the 2012 presidential election the Managing Partner of Bain Capital at the time, Steve Pagliuca (who ran against Martha Coakley in the Democratic primary to replace Ted Kennedy) was a big Obama bundler and advocate in Massachusetts, but never mentioned by either campaign.  

            "let's talk about that" uid 92953

            by VClib on Wed Aug 27, 2014 at 04:37:00 PM PDT

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            •  WTF difference does where their profit... (1+ / 0-)
              Recommended by:
              Older and Wiser Now

              comes from make?

              Do many of the companies they buy end up in the scenario I sketched out? Yes. Sure, it's not a homerun. I'm sure all the people who end up unemployed are truly heartened by the fact that Bain only made a profit that wasn't very important to Bain at the expense of their lives. If anything that's even worse.

              And nowhere did I say this was their major profit center. It's usually plan B (apologies to the contraceptive and a legal show set in Beantown). So when the gamble doesn't work, they take the money and run. They've got theirs, screw everyone else.

              I ride the wild horse .

              by BelgianBastard on Wed Aug 27, 2014 at 06:05:43 PM PDT

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            •  VClib (3+ / 0-)
              Recommended by:
              nextstep, VClib, andalusi

              I really appreciate your comments on financial and corporate matters on this site.  I find them to be thoughtful, even handed and most importantly, fact based, not ideologically based. They're a big help to me because I don't have much expertise in these matters, and I've learned a lot reading your remarks.

              Dammit Jim, I'm a lawyer, not a grammarian. So sue me.

              by Pi Li on Wed Aug 27, 2014 at 09:46:35 PM PDT

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              •  Thanks Pi Li for your kind words (3+ / 0-)
                Recommended by:
                Pi Li, andalusi, qphilo

                There is a small subset of the community here who share your view. Most people think I am a pain in the butt.

                I would say the same for your participation in the legal analysis of the high profile cases discussed here. There are very few who approach the cases in an analytical way, based on the law and rules of evidence. A more dispassionate approach isn't well received, so it takes some courage to provide that needed balance and information.

                "let's talk about that" uid 92953

                by VClib on Thu Aug 28, 2014 at 05:50:29 AM PDT

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            •  Based on how these partnerhips (1+ / 0-)
              Recommended by:
              VClib

              are structured, do you think his net worth is $250 mill, or much higher?

              I'm living in America, and in America you're on your own. America's not a country. It's just a business.

              by CFAmick on Wed Aug 27, 2014 at 10:33:36 PM PDT

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              •  CFA - it's impossible to know (1+ / 0-)
                Recommended by:
                CFAmick

                It all depends on what percentage of the carried interest in Bain Capital Romney retains. The fact that he has a large enough carry to generate annual income in the $10-20 million range is surprising, given that he hasn't worked at Bain Capital for more than 20 years. I am sure it is because he is a founder, and came back for a second tour when they needed help. Usually the carry of someone who retires diminishes over time, and rarely lasts more than a decade. I think Romney has given significant sums  to the Mormon Church, which probably has had an impact on his net worth. I am sure Romney feels that he has more than enough money to do whatever he would like for himself, his family, and church. I don't know Romney, but I know people who do, and he doesn't strike me as someone who feels the need to be a billionaire. I do not believe he has hidden assets anywhere. Romney is very much a straight shooter and his accountants, PWC, would never allow it.

                "let's talk about that" uid 92953

                by VClib on Thu Aug 28, 2014 at 05:45:16 AM PDT

                [ Parent ]

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