The Call Up

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July 15, 2012 3:29 pm
"Stop whining,” Rahm scolded the Republican candidate. “If you want to claim Bain Capital as your calling card to the White House, then defend what happened to Bain Capital."

Chicago mayor Rahm Emanuel said on ABC’s This Week this morning.  - The Daily Beast (via brooklynmutt

Oh Rahm, national politics misses you.

(via brooklynmutt)

January 25, 2012 11:00 am

Summers and Shleifer argued back in 1988 that buyouts are often aimed at “value redistribution” rather than “value creation”; specifically, a lot of the gains to the buyout specialists come from breaking implicit contracts with “workers, suppliers, and other corporate stakeholders.”

They make one especially keen point: if it were really about adding efficiency, why do the same people lead takeovers in many industries, instead of people with specific expertise in each industry doing the job? Their answer is that these specialists are specialists in deal-breaking, not value creation.


A nice little piece about what private equity really does.

(Source: The New York Times)

January 9, 2012 10:31 am
"But the fact that some of Bain’s biggest winners later landed in bankruptcy court “is potentially damning evidence” that the firm left the companies in vulnerable shape, said Mr. Strömberg, the Swedish academic. He said research shows that buyout companies, on average, add value to their targets, but it is worrisome if that reverses within a few years."

The WSJ does some serious reporting on how successful Bain really was. The results are not glowing—fully 30% of investments either filed for bankruptcy or lost the investment.

(Source: The Wall Street Journal)

October 27, 2011 8:23 am
"Productive workers and managers were rewarded, while unproductive ones were cut loose. Corporations realigned themselves to deliver more value to their shareholders, increasing dividend payments and stock buybacks. Within a decade, ordinary businesses were giving large stock and option packages to CEOs. Executive compensation soared. ‘These Bain Capital guys,’ says Neil Fligstein, an economics-sociology professor at the University of California, Berkeley, ‘were agents of the shareholder value revolution.’"

Turns out Mitt Romney and Co. are responsible for the collective shit hitting the fan.  They pioneered the idea of rewarding managers and CEOs for being ruthless, shedding jobs, keeping their eye on the bottom line regardless of the implications for the labor force or local economy.  And the amazing thing is they regard it as an inevitability that they merely helped facilitate. 

(Source: New York Magazine)