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Umm, do you know what private equity is? Last time I checked, private equity included any form of investment in private companies not traded on public exchanges

Umm, do you know what private equity is? Last time I checked, private equity included any form of investment in private companies not traded on public exchanges. This would include venture capital, angel investment, growth capital, etc. I consider that to be creating value. And as for this specific firm, I can't find a ton of info on them, and I can't tell from your comments whether you know a lot about them specifically, or if you're lumping them in with all other private equity folks. I'd like to know more before assuming they're the "scum of the earth" and dismissing their argument.

btilly 16y ago
You're right. There are different kinds of private equity. And some aren't nearly as bad as some of the others. If you want to know more about the author of this article, look at http://en.wikipedia.org/wiki/Ziad_K_Abdelnour http://en.wikipedia.org/wiki/Ziad_K_Abdelnour. His career has focused on investment banking, high yield bonds (nice name for junk bonds), and distressed debt (buying up the debt of failing companies, taking them over for not paying, restructuring them, then relaunching). He learned the private equity business in the 80s, which he finished at Drexel. That was the heart of the junk bond disaster, it was the company that made Michael Milken famous. At Blackhawk Partners he has been focusing on distressed debt. In short, he doesn't look like the nice kind of private equity.
- ryanwaggoner 16y ago
  To the contrary, I think that distressed debt is a great part of the private equity business. The process you describe as "buying up the debt of failing companies, taking them over for not paying, restructuring them, then relaunching" is ridiculously valuable and necessary for a functioning economy. What's your preferred alternative to the problem of failing companies?
  - btilly 16y ago
    I agree that there is a necessary job there, but a lot of the problem they are "solving" is artificially created. You've got to look where they fit in the financial ecosystem. First one set of private equity folks come along, structure a deal, and leave a previously healthy company saddled with lots of debt. (Private equity folks make guaranteed money on the deal, everyone else bears risk.) If that company proves unable to handle it, the distressed debt folks come along, buy up the debt at a fraction of the price, take control of the company cheaply, then forgive much of the debt they bought. The now healthier company gets flipped back to the same private equity folks who ruined it in the first place who, as is their standard operating procedure, load it up with debt again. It is a magic cycle. Every iteration brings more pain and misery to the people working there, making the product worse, slowly bleeding the consumer base, but throwing off more profit for the private equity folks. And the sad thing is that the poor company didn't need to go through any of this. It started off fine and would be in better shape if the whole process hadn't ever started.

btilly 16y ago

You're right. There are different kinds of private equity. And some aren't nearly as bad as some of the others. If you want to know more about the author of this article, look at http://en.wikipedia.org/wiki/Ziad_K_Abdelnour http://en.wikipedia.org/wiki/Ziad_K_Abdelnour. His career has focused on investment banking, high yield bonds (nice name for junk bonds), and distressed debt (buying up the debt of failing companies, taking them over for not paying, restructuring them, then relaunching). He learned the private equity business in the 80s, which he finished at Drexel. That was the heart of the junk bond disaster, it was the company that made Michael Milken famous. At Blackhawk Partners he has been focusing on distressed debt. In short, he doesn't look like the nice kind of private equity.

ryanwaggoner 16y ago
To the contrary, I think that distressed debt is a great part of the private equity business. The process you describe as "buying up the debt of failing companies, taking them over for not paying, restructuring them, then relaunching" is ridiculously valuable and necessary for a functioning economy. What's your preferred alternative to the problem of failing companies?
- btilly 16y ago
  I agree that there is a necessary job there, but a lot of the problem they are "solving" is artificially created. You've got to look where they fit in the financial ecosystem. First one set of private equity folks come along, structure a deal, and leave a previously healthy company saddled with lots of debt. (Private equity folks make guaranteed money on the deal, everyone else bears risk.) If that company proves unable to handle it, the distressed debt folks come along, buy up the debt at a fraction of the price, take control of the company cheaply, then forgive much of the debt they bought. The now healthier company gets flipped back to the same private equity folks who ruined it in the first place who, as is their standard operating procedure, load it up with debt again. It is a magic cycle. Every iteration brings more pain and misery to the people working there, making the product worse, slowly bleeding the consumer base, but throwing off more profit for the private equity folks. And the sad thing is that the poor company didn't need to go through any of this. It started off fine and would be in better shape if the whole process hadn't ever started.