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4. Bain Capital only offered $ 18 million in cash, the rest was leaveraged debt put on the company.
5. "Sixteen months after the buyout, Bain Capital paid itself $85 million in dividends in early 2002."
6. "January 14, 2004, K·B Toys filed for Chapter 11 bankruptcy protection and closed 365 stores."
7. Three years later the rest of the 156 stores were closed down.
But there is a little more to the story. KB Stores had already gone through a tough restructuring in 1996. At that time a private equity bought the company, closed unprofitable stores, and increased profits.
So here is the objective reality of what Bain did.
Bain engineered a private equity purchase of a profitable company that had already gone through 'creative destruction' eliminating unprofitable legacy operations and saddled the company with hundreds of millions of dollars of debt. The company was not just profitable but an example of the kind of companies that demonstrate a wider social conscious for its customers and the larger community. Sixteen months after purchasing the company with only 6% cash of the value Bain takes out dividends at over 400% of their investment. Significantly this was done during the time of the attacks on 9/11 when the country as a whole was undergoing a hightened sense of patriotism, sacrifice and social duty. Less than 2 years after saddling KB Toys with massive debt and taking out astronomical dividends, K-B Toys faces Chapter 11 bankruptcy and closes 354 previously profitable stores.
its called a LBO, and businesses do that all the time to buy one another up. Thats nothing new, nor is it limited to Bain.
Find me another company.....That's the only company they acted as a true venture capitalist, which is what we want not a corporate raider like they became.
Oh bull crap. LBO's are very very common with corporate buyouts. Warren Buffet himself uses them to finance many of the purchases he buys up, and I've used them myself quite frequently to buyup not only companies, but also properties. Anyone who knows a dam thing about corporate finances, (which you claim to be very knowledgable about having a degree), knows its standard practice.
Go back to school and tell them you want a refund on your degree..
Oh bull crap. LBO's are very very common with corporate buyouts. Warren Buffet himself uses them to finance many of the purchases he buys up, and I've used them myself quite frequently to buyup not only companies, but also properties. Anyone who knows a dam thing about corporate finances, (which you claim to be very knowledgable about having a degree), knows its standard practice.
Go back to school and tell them you want a refund on your degree..
Yea right, I'll ask the priests and nuns for a refund.
Who really started LBO's and why....
Michael Milken was the one who popularized the junk bond, what a lot of people don't know about Milken is he was one of the first people to realize that the value of a companies assets might be more valuable than their value on the open market. Also he was able to create more junk bonds as these were the primary finance tool used to finance the buyout....
So your LBO hero is a convicted felon.... Surprised Mitt do time and room with him.
At Milken's sentencing, Judge Kimba Wood told him:
You were willing to commit only crimes that were unlikely to be detected.... When a man of your power in the financial world... repeatedly conspires to violate, and violates, securities and tax business in order to achieve more power and wealth for himself... a significant prison term is required.[16]
Milken's sentence was later reduced to two years from ten; he served 22 months.[1]
Bellhead,
I just got done proofreading your dissertation for you on the Colonial American Economies. I would highly advise that you cut out ALL citations of Jersey Shore, Twilight, and Friends. Instead, I would quote and source primary documents and other experts within the field of colonial American economies.
Yea right, I'll ask the priests and nuns for a refund.
Who really started LBO's and why....
Michael Milken was the one who popularized the junk bond, what a lot of people don't know about Milken is he was one of the first people to realize that the value of a companies assets might be more valuable than their value on the open market. Also he was able to create more junk bonds as these were the primary finance tool used to finance the buyout....
So your LBO hero is a convicted felon.... Surprised Mitt do time and room with him.
At Milken's sentencing, Judge Kimba Wood told him:
You were willing to commit only crimes that were unlikely to be detected.... When a man of your power in the financial world... repeatedly conspires to violate, and violates, securities and tax business in order to achieve more power and wealth for himself... a significant prison term is required.[16]
Milken's sentence was later reduced to two years from ten; he served 22 months.[1]
LBO's are over 100 years old and are done EVERY SINGLE DAY..
You went to school and learned business from priests and nuns?
LBO's are over 100 years old and are done EVERY SINGLE DAY..
You went to school and learned business from priests and nuns?
Yea, but were not highly popular until the junk bond king came around and really brought them into their hey day. Gotta give the guy credit, hate the fact that he destroyed lives and shattered communities but he was one of the first people to realize that the assets of a company were worth more than their perceived value on the market. If I remember correctly from Den of Thieves and Liar's Poker Milken would target companies spread the rumors of their value and then wait for people to come to him for equity to do a LVO. He would issue the Junk Bonds on which the LVO was financed, what was even better for him was there was zero risk. On the juicer targets he had a select group he would go in with and carve them up for himself. Which ever made more money for him...
How is what Mitt different from the junk bond king? Well the biggest is he wasn't as talented or creative as Milken...
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