Private equity is a controversial and perhaps disreputable business to work in. That’s the message that seems to animate today’s front page New York Times article about Republican presidential hopeful Mitt Romney. The story tells the story of how Romney wound up as the founder of Bain Capital, and how he made a fortune in the leveraged finance business. By all accounts he was fantastic at the job—great at convincing business owners to sell, bankers to lend money, and investors to hand over funds for management.
But we can’t escape the impression that the Times article—written by political reporter David D. Kirkpatrick—is suggesting that there is something at least a little bit dirty about leveraged buyouts and private equity firms. There’s the implication that running a private equity firm isn’t like running a business. It’s more like being some sort of super salesman, or maybe even being a politician, the article says. And we cannot help but think that a little bit of editing by someone in the business section might have made this description of leveraged buyouts a little less contentious:
He made his money mainly through leveraged buyouts — essentially, mortgaging companies to take them over in the hope of reselling them at big profits in just a few years. It is a bare-knuckle form of investing that is in the spotlight because of the exploding profits of buyout giants like Bain, Blackstone and the Carlyle Group. In Washington, Congress is considering ending a legal quirk that lets fund managers escape much of the income tax on their earnings.
As far as it goes, that seems accurate. But it doesn’t go far enough. It leaves out the fact that buyouts typically involve purchasing all the outstanding shares of a company, delivering shareholders a premium above the market price. And it paints those in the private equity business as especially greedy, twice mentioning profits—“big profits” and “exploding profits”—and implying that fund managers are tax dodgers. (Even the phrase “mortgaging companies” is a bit loaded coming so soon after the public has heard about the subprime mortgage meltdown.)
We don’t spend too much time with the A Section of the New York Times. This story was a good reminder of why that is.
Romney’s Fortunes Tied to Business Riches [New York Times]
2 carney posts digging in to today’s journalistic integrity. get angry, JC, get angry.
gotta fill the pages on “no news” Mondays. u no dat.
reminder from carney that deep-down he’s another poli-blogger.
nyt has been getting pretty polemical on the candidates lately (save for barry o.)… see also the mag’s piece on clinton over the weekend.
LBO is a racket, and an old one at that.
Carney, you’ve got blinders on. We don’t need Grey Lady implications to know that private equity barons ARE greedy (they’d prefer not to give shareholders a premium) they ARE completely motivated by profit and they ARE tax dodgers, or at least they try to be. Those three things make good business, so why try to defend against them?
Amazing that the reporters dug into so much detail and chose not to mention the real story. They painstakingly avoided mentioning real management. The truth is that after making Bain capitol a success Romney was brought back to save the original Bain company. He managed the successful turnaround of the Olympics. He manged the turnaround of numerous failing companies. Banies are known for taking over poorly managed companies and actually fixing the problems. Fixing problems and managing is what Mitt does. Somehow the author chose to gather tons of detail, and tell a story that did not reflect the available information
It’s amazing the double standard the media continues to impose on Mitt Romney. The more they try to discredit him the more I am liking him.
I think Jim Cramer has it right.
http://www.youtube.com/watch?v=QoBKgmnVkrc
Think what Romney would do for our economy.
Would you be more or less likely to vote for Mitt if the article read:
He lost his money mainly through leveraged buyouts — essentially, mortgaging companies to take them over in the hope of reselling them at lower profits in just a few years. It is a bare-knuckle form of investing that is in the spotlight because of the exploding debts of buyout losses like Bain, Blackstone and the Carlyle Group. In Washington, Congress is considering ending a legal quirk that lets fund managers pay too much income tax on their earnings.
I don’t know about you but the latter version of Romney sounds too stupid to be the president. Lets keep Romney the way he is, a good business man that hates too much taxes and likes to be successful.
This aticle is an example of the media unable to tie Romney to any scandels that they’ll try and make one up.
Get the facts Romney made poorly run businesses better and profitable, Staples, Dominos etc. I’m tired of the career politicians who don’t get anything done.
Romney succeeded in getting a demorcratic state healthcare in less than 4 years. Hillary couldn’t accomplish it in 8. I want someone who will get things done.
Romney has the resume, the education and the moral values of walking the talk. He has my vote.
This aticle is an example of the media unable to tie Romney to any scandels that they’ll try and make one up.
Get the facts Romney made poorly run businesses better and profitable, Staples, Dominos etc. I’m tired of the career politicians who don’t get anything done.
Romney succeeded in getting a demorcratic state healthcare in less than 4 years. Hillary couldn’t accomplish it in 8. I want someone who will get things done.
Romney has the resume, the education and the moral values of walking the talk. He has my vote.
This aticle is an example of the media unable to tie Romney to any scandels that they’ll try and make one up.
Get the facts Romney made poorly run businesses better and profitable, Staples, Dominos etc. I’m tired of the career politicians who don’t get anything done.
Romney succeeded in getting a demorcratic state healthcare in less than 4 years. Hillary couldn’t accomplish it in 8. I want someone who will get things done.
Romney has the resume, the education and the moral values of walking the talk. He has my vote.
The three posts above are an example of a typical Republican not quite smart enough to figure out the internets.
The three posts above are what happens when you try to post a comment on a half-assed website run by some incompetent Noo Yawk (a.k.a. Big Bagel) media wannabes.
skeptic, you mean “The Internet”?
“Fixing problems and managing is what Mitt does. Somehow the author chose to gather tons of detail, and tell a story that did not reflect the available information”
If this guy is so good at fixing broken companies, why isn’t he running an activist hedge fund instead of a PE fund? If it was all just about controlling and turning around distressed public corporations then shareholder activism would be the most time and cost efficient way.
travis, he is making fun of Bush, who once misspoke and called it the “internets”