Interesting article for all those who are touting his "business experience".
How Romney grew rich by plundering companies - Chicago Sun-Times
Whiny Romney supporter response..."But, but, but you just hate his religion!"
How Romney grew rich by plundering companies - Chicago Sun-Times
Edited-copywrite violationThe actions of Romney’s firm are detailed in the 2009 book by financial reporter Josh Kosman, The Buyout of America: How Private Equity is Destroying Jobs and Killing the American Economy. The chapter that focuses on Romney and Bain Capital is aptly titled “Plunder and Profit.”
Private equity firms operate through leveraged buyouts. They create limited partnerships to buy companies, usually pretty healthy ones since it’s the only way to attract financing, and then they burden the companies with debt while trying to make the balance sheets look good, often by cutting costs such as workers or their benefits, to flip the companies within five years for a profit.
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Now the fun starts. To make a company look more valuable to a potential buyer, the companies are managed for short-term gains. Private equity firms often do this by making “deep cuts in spending on current operations and on research to develop new products.” Employees get fired. Reinvestment in the company is shortchanged — just the opposite of expanding economic growth and job opportunity.
Romney’s Bain Capital also figured out another way to make money from the companies it bought: have the companies borrow even more money and use it to pay the owners (themselves) distributions and dividends.
Romney denies that he was part of the decision to extract large sums from businesses that collapsed. But Kosman cites Geoffrey Rehnert, who helped start Bain Capital and who insists that Romney controlled the firm when it collected “enormous distributions from three companies ... it drove into bankruptcy.”
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Whiny Romney supporter response..."But, but, but you just hate his religion!"