Comments on: Overly Leveraged Private Equity Deals Add to Unemployment and Deepen Recession

By: Joachim Mueller

Joachim Mueller — Mon, 15 Dec 2008 07:00:04 +0000

Excellent article!

Some two years ago a German politician was chastised for calling private equity firms “hyenas”. Well, that’s what they are: bone crushing predators. The people running those hyena companies love to have power and money and destroy the markets. That way they they also destroy the capitalistic ideology that claims that market “clean” themselves.

I believe those predators should be outlawed because they are of no benefit except to a tiny greedy minority taking advantage of their aggressiveness that regular people cannot (and should not) match.

Thanks again,

Joachim

By: Maurice Malcolm

Maurice Malcolm — Sun, 14 Dec 2008 20:05:29 +0000

Twenty years ago I worked for a very good geophysial company called Geosource. I was with them for nearly 14 years and they were taken over my AETNA for a period of three months only. In that time they stripped the liquid assets, world wide pension funds and anything that was worth anything and just spat it out. The long term employees lost just about everything and there was nothing we could do. I am retired now and have not a cent from Geosource, all my retirement fund went in some CEO`s bonus package. Greed without conscience is their motto.

By: Searcher

Searcher — Sun, 14 Dec 2008 17:59:14 +0000

Calls for regulatory oversight, transparency in reporting, and stripping away weasel euphemisms have been made after every systematic folly for as long finance has been an identified, if not understood, concept. Leveraging other people’s money is at the heart of any concept of finance as an ‘industry’. Institutions, of varying legitimacy, supposedly mitigate, if not prevent, the inevitable excesses of human nature. Unfortunately, institutions require structure and rules and the administration of their enforcement through investigation and prosecution resulting in sanctions; all subject to human nature. I don’t think ignorance of the subject is an acceptable trade off for minimizing the taint of knowledge. That is why we have academicians

By: Carlos E. Comesana

Carlos E. Comesana — Sun, 14 Dec 2008 15:04:48 +0000

The damage is and will be so great that it is time to make the list of the responsible people. FED, SEC and Treasury Secretary officials and the Presidency itself are involved. Should also include financial executives from both sides that enriched putting on motion “ex-professo” new and uncontrolled financial mechanisms. Problem is that I don’t see who is capable and morally free to undertake this job.

By: Tom

Tom — Fri, 12 Dec 2008 13:38:44 +0000

Dear Shah: You article was interesting, but several parts are inaccurate. Private equity (PE) is an asset class that includes leveraged buyouts, but also expansion, growth and bridge financing. To lable LBOs as PE is not true, some even lump venture capital (VC)into the general catch all phrase of private equity.

Investors and funds have been doing, and continue to do expansion, growth and bridge financing, which is done as loans and equity, but with no leverage. Sorry for correcting you, but I’m in the VC/PE business for 22 years.

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By: Kerry Gillespie

Kerry Gillespie — Thu, 11 Dec 2008 23:19:18 +0000

I would like to point out that not all private equity firms can be painted with the same brush. I happen to work for a portfolio company of a very conservative PE firm who’s modus operandi is to buy firms at a discount (due to poor management or other conditions) with an appropriate mix of debt and equity, hire strong management teams to improve operations and financial results, and then cash out at an appropriate time. The headline failures noted in Shah’s article are the result of financial engineering and other excesses made possible by cheap debt, which no longer exists. Yes, many of these PE firms are dens of thieves, but there are others who legitimately add value to companies through good old fashioned equity growth.

By: Joe East

Joe East — Thu, 11 Dec 2008 20:42:22 +0000

If ever there was a need for regulation, this is it!
A case in point of how these people operate and the results of their actions, is the just announced filing for bankruptcy of Tribune Corp. Exactly the same scenario as exposed in the great article.

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Jutia Group - Market Jitters & Political Critters — Thu, 11 Dec 2008 18:41:25 +0000

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