🚀 go-pugleaf

Peter Flass <peter...@yahoo.com> writes:
> Interesting article on MarketWatch a day or so about Sears. Apparently
> Eddie Lampert, the guy who bought it thru his hedge fund was
> interested in maximizing "shareholder value" at the expense of
> everting else. There's no long-term in p%ssing off your employees and
> customers to milk a couple more dollars from it. The article writer
> said it might be heresy to Wall Street to suggest that this was a bad
> idea.

private-equity LBO borrows 100% to buy the company ... and then puts the
loan on the bought company's book ... then private-equity extracts money
in lots of different ways ... under lots of different excuses ... and
then can walk away from the remainder. sometimes they can IPO whats left
... extracting even more. over half corporate defaults are companies
that have been through (or are in) the private-equity mill. what is
somewhat surprising is all of these defaults never seem to affect the
credit rating of the original private equity borrower.

no matter what happens, the private-equity companies walk away with boat
loads of money. one of the analogies is 100% mortgages for
house-flipping ... except the mortgages goes with the flipped houses
(rather than paid off) ... they make money even if the flipped house is
sold for less than they paid.
http://www.nytimes.com/2009/10/05/business/economy/05simmons.html?_r=0

again, it seems remarkable that it doesn't seem to ever touch the credt
rating of the private-equity companies that take out the original loan.

last decade, they were heavily into buying up gov. contractors ...  then
putting heavy pressure on them to cut corners every way possible (so
there was more money for the private equity owners). They other thing
they appeared to leverage ... is gov. agencies aren't allowed to lobby
congress ... and gov. contractors aren't allowed to use moeny from
gov. contracts to leverage congress ... but there seems to be no
restriction on the lobbying by private equity owners .... resulting in
enormous increase in gov. outsourcing last decade.

in intelligence, 70% of funds and over half the people (including
Snowden)
http://www.investingdaily.com/17693/spies-like-us

which also significantly accelerates the rapidly spreading success of
failure culture ... aka make more money off series of failures
http://www.govexec.com/excellence/management-matters/2007/04/the-success-of-failure/24107/

note that the for-profit companies that got contracts for doing
security clearances were found to be filling out the paper work
but not actually doing background checks

computer related, AMEX was in competition with KKR for
take-over of RJR and KKR wins, KKR runs into some trouble
and hires away president of AMEX to help
https://en.wikipedia.org/wiki/Barbarians_at_the_Gate:_The_Fall_of_RJR_Nabisco
IBM has gone into the red and hires the former president of AMEX
to help turn things around ... who uses some of the same
techniques at RJR
http://www.ibmemployee.com/RetirementHeist.shtml

then leaves for another private-equity company that will buy the beltway
bandit that employs snowden
http://www.motherjones.com/politics/2007/10/barbarians-capitol-private-equity-public-enemy/

Lou Gerstner, former ceo of ibm, now heads the Carlyle Group, a
Washington-based global private equity firm whose 2006 revenues of $87
billion were just a few billion below ibm's. Carlyle has boasted George
H.W. Bush, George W. Bush, and former Secretary of State James Baker III
on its employee roster

... snip ...

lots of politicians on the payroll to help with congressional lobbying
on behalf of their gov. contractor subsidiaries.

private-equity posts
http://www.garlic.com/~lynn/submisc.html#private.equity
success of failure posts
http://www.garlic.com/~lynn/submisc.html#success.of.failure
former AMEX president posts
http://www.garlic.com/~lynn/submisc.html#gerstner

one of the other areas that private equity has moved in on is health
care, buying up hospitals and medical/dentist practices.

-- 
virtualization experience starting Jan1968, online at home since Mar1970