To: President Donald Trump, The United States House of Representatives, and The United States Senate
How Bain, Carlyle, Civen & other Equity Capital reall work
To show that Equity Captal companies do actually use Other peoples Money to Acquire and abuse their positions for personal benefit
Why is this important?
In my 50 years in industry in US & UK & Canada as a consultant , employee and company director in more than 17 companies been acquired or the acquiring companies. I have benefited from only one of the companies in which I was the co-founder.
The verbage used has been LBO's, Leverage Buy Outs, M&A's, etc., etc. The bottom line the actual individual leaders who manage these make the least amount of their personal money in the " acquisition of the other company who may or may not be a profitable company.
They " leverage" the assets of the acquired company to borrow money. or use shares of the new ABC company to pay for the transaction. They than sell the physical assets in the balance sheet which may consist of buildings, divisions, or plant & machinary.
They than " trim" the work force, reduce salary & benefits , rewarding just a few of the senior employees who they use to carry out their decisions.
Then within 2 to 7 years dress up the balance sheet and the new facade of the company and sell it to the highest bidder. In the meantime the Directors of the Equity capital company collect substantial fees and expenses in lieu of salary plus stock options.
They then share with the actual investor or the lending institutions who provided the funds and/or loans to buy the company.
The verbage used has been LBO's, Leverage Buy Outs, M&A's, etc., etc. The bottom line the actual individual leaders who manage these make the least amount of their personal money in the " acquisition of the other company who may or may not be a profitable company.
They " leverage" the assets of the acquired company to borrow money. or use shares of the new ABC company to pay for the transaction. They than sell the physical assets in the balance sheet which may consist of buildings, divisions, or plant & machinary.
They than " trim" the work force, reduce salary & benefits , rewarding just a few of the senior employees who they use to carry out their decisions.
Then within 2 to 7 years dress up the balance sheet and the new facade of the company and sell it to the highest bidder. In the meantime the Directors of the Equity capital company collect substantial fees and expenses in lieu of salary plus stock options.
They then share with the actual investor or the lending institutions who provided the funds and/or loans to buy the company.