Does Romney have the right kind of business background?

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    Does Romney have the right kind of business background?

    We understand the achievements of Bill Gates and Steve Jobs. They created enterprises that employ thousands and sell to millions. But private equity, Romney’s specialty? That’s more complex and confusing. Texas Gov. Rick Perry calls Romney a “vulture capitalist.” Former Utah governor Jon Huntsman says Romney “enjoys firing people.” Is Romney’s business experience a virtue or a vice?

    Private equity refers to groups of investors buying the stock of an existing company, thereby “taking it private.” Because most purchases use borrowed money (“leverage”), these transactions are known as “leveraged buyouts.” Once the investor group has control, it tries to improve profitability by lowering costs and increasing sales. The hope is to resell the business at a huge gain; this usually takes three to 10 years. In 2010, private-equity firms invested $148 billion in 1,234 U.S. companies, says the Private Equity Growth Capital Council.

    The larger truth is that private equity doesn’t consciously strive to create jobs. The main aim is to improve a company’s profits and resale value.

    Does Romney have the right kind of business background? - The Washington Post
     

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