The book called Plunder (by Brendan Ballou) will walk you through the steps that are used by private equity and hedge funds to:(1) buy a company utilizing a large amount of "BORROWED" debt, (2) sell the company's land and buildings (and keep the proceeds from these sales), (3) charge extremely large "annual management fees" against the existing management, (4) reduce the pay of ALL current employees, (5) reduce/eliminate healthcare coverage of current employees, (6) reduce/eliminate retirement accounts/pensions of current employees, (7) periodically/annually charge a "one-time dividend" forcing management to borrow additional money from banks to pay the dividend to the new hedge fund or private equity, and (8) reduce services/goods offered by the original company. When the company fails, then the new owners close the company and sell whatever is left..... It is a very sick plague on US businesses... (please note: I have NO relationship with the author of this book and I do not know the author of this book).
Yeah, good summary. I remember there was a movie about this as well, but at that time I never understood the real problem. I just assumed these things happen to obscure companies.
Listening to Patrick Byrne, this is pretty much what they did to all Amazon competitors, when they propelled Amazon to be the sole giant. Heartbreaking to watch so many families' generational efforts destroyed just like that, and most people, even the owners themselves, many times blame themselves for the failures.
The book called Plunder (by Brendan Ballou) will walk you through the steps that are used by private equity and hedge funds to:(1) buy a company utilizing a large amount of "BORROWED" debt, (2) sell the company's land and buildings (and keep the proceeds from these sales), (3) charge extremely large "annual management fees" against the existing management, (4) reduce the pay of ALL current employees, (5) reduce/eliminate healthcare coverage of current employees, (6) reduce/eliminate retirement accounts/pensions of current employees, (7) periodically/annually charge a "one-time dividend" forcing management to borrow additional money from banks to pay the dividend to the new hedge fund or private equity, and (8) reduce services/goods offered by the original company. When the company fails, then the new owners close the company and sell whatever is left..... It is a very sick plague on US businesses... (please note: I have NO relationship with the author of this book and I do not know the author of this book).
Very good insight.
Yeah, good summary. I remember there was a movie about this as well, but at that time I never understood the real problem. I just assumed these things happen to obscure companies.
Listening to Patrick Byrne, this is pretty much what they did to all Amazon competitors, when they propelled Amazon to be the sole giant. Heartbreaking to watch so many families' generational efforts destroyed just like that, and most people, even the owners themselves, many times blame themselves for the failures.