Romney's NC roots plastered with pink slips

With friends like this, who needs enemies:

Prior to the acquisition, Interpath had started to struggle. And once in control, Bain moved quickly to cut costs, laying off 50 employees within a month. By August, after a round of layoffs and larger attrition, the company had 220 employees compared to 700 at the start of the year.

That's a 68% reduction in the workforce. Without even knowing any of the details, we can surmise that servicing the company's existing client base (much less growing it) was not a consideration, nor was properly developing new revenue streams. It was a toxic facelift, designed solely to make the company merger-ready:

Bain shed many Interpath divisions and merged the company with Maryland-based Usinternetworking in 2002. Only about 20 employees stayed in the Triangle and others were offered transfers or severance packages.

Just a note for business owners who are contemplating seeking capital from an investment firm: Your prospective investor should want to know everything about your company. Outstanding debt, amortization schedules, P&L statements, process controls, market penetration, new product development plans, etc.

If they don't want to know what you're doing or what you plan to do, that means their plan doesn't include you. And that's a problem.

Josh Kosman, the author of “The Buyout of America,” examined the broader role of private equity and determined that “most of the time private equity firms hurt the companies” they purchase. Four of Bain’s 10 biggest acquisitions under Romney later ended with the acquired company in bankruptcy.

Citing a financial study in his book, Kosman concluded “it is pretty clear ... that they destroy jobs.” Even when they make money, Kosman said it “goes to pay debt, sometimes it’s put back to the private equity (firm) in the form of a dividend, but it’s not used to build that company and the companies get much weaker.”

It's a common misconception that companies only go into debt when they've made mistakes and need a lifeline. In reality, you can't grow a business without generating debt. Whether it's taking advantage of volume deals on raw materials and/or equipment, or expanding/modifying structures to accomodate increased production capacity, going into the red is part of a normal, healthy business operation.

But what's not healthy are the trends in our financial sector. Historically, banks have provided the bulwark of operating capital for established businesses, through revolving credit or loans for specific expansion projects. Unfortunately, our banking insitutions are dedicating more and more of their capital to facilitating investment firms in their dubious acquisitions, leaving established businesses with few alternatives for injections of capital.

And as the fire dwindles, the wolves circle closer.


yeah but

ima proud repulican an ima vote for that stinkin' corprate rapist cuz at lease he aint a goddamn muslin nigraboy comnist

More to the point

Every business I've ever run or known about uses debt to finance growth. That's what stimulus spending is all about. Those who want to run government like a business while avoiding deficit spending don't know jack shit about running businesses.

Exactly. Debt is just another tool

in the toolbox for keeping the machine running. Only someone who doesn't understand how the machine operates would discard such an integral tool.