The other thing is that what companies like Bain do is buy companies that are not doing well and try to revive the parts of them that they think can be brought back while closing down the losers.
Actually that's not quite what they do, or not entirely. One of my friends explained to me her personal experience with Bain, a few years back, and now I finally have a better understanding of the term "leveraged buy-out."
In her company's case, Bankware had recently been bought by someone else and everyone was doing well, until Bain took out a large loan to be able to buy the company, using the company as the collateral (that part is a bit confusing but I think that's how it worked.) She quit after having to lay off a bunch of people, 'cause after Bain took their management cut (yay cash) the company still had to pay off that loan that had been used to buy them.
If that's really how leveraged buyouts work, I don't understand why they're legal.
(I don't have the time to read http://en.wikipedia.org/wiki/Leveraged_buyout, but at least the beginning seems to match up. If so, gah, I don't see any honorable use for the practice.)
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Date: 2012-07-17 07:39 pm (UTC)The other thing is that what companies like Bain do is buy companies that are not doing well and try to revive the parts of them that they think can be brought back while closing down the losers.
Actually that's not quite what they do, or not entirely. One of my friends explained to me her personal experience with Bain, a few years back, and now I finally have a better understanding of the term "leveraged buy-out."
In her company's case, Bankware had recently been bought by someone else and everyone was doing well, until Bain took out a large loan to be able to buy the company, using the company as the collateral (that part is a bit confusing but I think that's how it worked.) She quit after having to lay off a bunch of people, 'cause after Bain took their management cut (yay cash) the company still had to pay off that loan that had been used to buy them.
If that's really how leveraged buyouts work, I don't understand why they're legal.
(I don't have the time to read http://en.wikipedia.org/wiki/Leveraged_buyout, but at least the beginning seems to match up. If so, gah, I don't see any honorable use for the practice.)