ProPublica - "Finders Weepers: Early Bain Disputes Cast New Light on Its Business"

[TomCADem]

I feel inspired. I guess if financial regulation is peeled back under Romney and another real estate bubble starts, I can buy property with a stated income, liar's loan, then take out any remaining equity as the bubble inflates through more loans and debt, then hopefully sell the debt ridden property to the next sucker before the bubble pops. Hey, if I keep it up and avoid being left holding the bag, perhaps I can run for President some day on my record as a job creator!


http://www.propublica.org/article/finders-weepers-early-bain-disputes-cast-new-light-on-its-business

Yet in addition, under Romney's tenure, Bain often sought out solid businesses that didn't need to be turned around. The reason: Such companies could operate under the burden of the enormous debt that Bain would layer on them.

"They always told us day one: They wanted profitable companies that are doing OK, and they pay what they needed to pay," says Phillip Roman, who heads up an eponymous mergers and acquisitions firm that was involved in a legal dispute with Bain in the 1990s similar to McCall Springer's. "There are companies that like turnarounds," referring to other private equity firms. "That's another business" from the one Bain was in.

Bain in the 1990s was "doing more [of] the usual leveraged buyout: Buy with a lot of debt, try to increase earnings and sell as soon as possible," says Ludovic Phalippou, an expert on private equity at the University of Oxford in England. The firm was seeking "mature companies with high cash flow," he says, with sufficiently stable earnings "to be able to leverage a lot."

Financial data on many of Bain's acquisitions are not available, since they were private transactions. But there are several examples of companies that Bain took over that were established and seem to have had enough revenue to support leverage. Bain and another firm bought what they would name Masland Holdings, a maker of automobile carpeting and insulation, from Burlington Industries in 1991. Masland had $305 million in sales that year, according to Dun & Bradstreet. The firms took it public in 1993. Duane Reade was a successful family-run business with revenue of $225 million when Bain bought it in 1992, according to the Wall Street Journal, and sold it five years later.

[ProgressiveEconomist]

1. You mean, Bain's vulture capitalism fed on healthy companies,

that could afford to pay astronomical "management fees" and high interest on huge debt, and would be re-sellable in a few years?