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What Bain Capital wants is to be able to make the short-term operating metrics look good enough to IPO the company and sell it at an inflated price to some buy

What Bain Capital wants is to be able to make the short-term operating metrics look good enough to IPO the company and sell it at an inflated price to some buy side dumbasses who are left holding the bag when it goes bankrupt (mutual funds, pension funds, etc).

afandian 9y ago
Why doesn't this poison the image of organisations that have been through Bain Capital then? Who would buy shares associated with this behaviour?
- ggg9990 9y ago
  Dumbasses
- irrational 9y ago
  That's what I wonder too. I would run the other way if I saw that Bain was involved. Since it appears that people are not doing that... I have to assume that, like most things in life, there is a lot here that I don't understand so my gut reaction is flawed.
- mywittyname 9y ago
  Bain actually has a long history of successfully turning companies around via LBOs. So it's not that they are acting maliciously, but they are minimizing their risk and exposure in the event of a failure. And they way they do so is to push the exposure onto the downstream investors.
  - prklmn 9y ago
    Saying they turn companies around is being generous. They typically don’t buy companies that are in the dumps, they buy companies that are humming along and might have room for improvement, cut expenses by firing employees, raise debt, and try to put the company in a good enough position to meet debt obligations. I wouldn’t credit them with turning too many companies around. If anything they are “turned around” from the debt laden messes that Bain creates into something the company looked somewhat similar to before the buyout.
    - mywittyname 9y ago
      They actually did turn around Toys R Us after acquiring it. In 2005, they were digging out from yet another failed attempt to reinvigorate their brand (which peaked in the 90s). They made strides in the late 00s with a big push into online, but growth stalled as competition from other retailers grew.
    - whatok 9y ago
      So if these companies are "humming along" why are they selling to Bain? If they're doing so great, why doesn't someone outbid Bain?
      - prklmn 9y ago
        They sell to Bain because it’s easy, makes the shareholders happy, and the board and executives get rich from it. And to your second question, an interesting read from the FT https://www.google.com/amp/s/amp.ft.com/content/e1732e1c-fa7d-11e6-bd4e-68d53499ed71 https://www.google.com/amp/s/amp.ft.com/content/e1732e1c-fa7...
  - googlryas 9y ago
    Why aren't these downstream investors pricing accordingly then? Less sophisticated than Bain? Or are Bain's successes enough to mollify any fears about their failures?
  - busterarm 9y ago
    They also have a long history of running companies into the ground via LBOs. Just look at Guitar Center. Unfortunately when they explode, they're going to take companies like Gibson and probably also Korg with them. Gibson is already in the process of unraveling right now. Their impending bankruptcy was obvious when they didn't have a booth at NAMM this year. It's absolutely predatory behavior what they did.

afandian 9y ago

Why doesn't this poison the image of organisations that have been through Bain Capital then? Who would buy shares associated with this behaviour?

ggg9990 9y ago
Dumbasses
irrational 9y ago
That's what I wonder too. I would run the other way if I saw that Bain was involved. Since it appears that people are not doing that... I have to assume that, like most things in life, there is a lot here that I don't understand so my gut reaction is flawed.
mywittyname 9y ago
Bain actually has a long history of successfully turning companies around via LBOs. So it's not that they are acting maliciously, but they are minimizing their risk and exposure in the event of a failure. And they way they do so is to push the exposure onto the downstream investors.
- prklmn 9y ago
  Saying they turn companies around is being generous. They typically don’t buy companies that are in the dumps, they buy companies that are humming along and might have room for improvement, cut expenses by firing employees, raise debt, and try to put the company in a good enough position to meet debt obligations. I wouldn’t credit them with turning too many companies around. If anything they are “turned around” from the debt laden messes that Bain creates into something the company looked somewhat similar to before the buyout.
  - mywittyname 9y ago
    They actually did turn around Toys R Us after acquiring it. In 2005, they were digging out from yet another failed attempt to reinvigorate their brand (which peaked in the 90s). They made strides in the late 00s with a big push into online, but growth stalled as competition from other retailers grew.
  - whatok 9y ago
    So if these companies are "humming along" why are they selling to Bain? If they're doing so great, why doesn't someone outbid Bain?
    - prklmn 9y ago
      They sell to Bain because it’s easy, makes the shareholders happy, and the board and executives get rich from it. And to your second question, an interesting read from the FT https://www.google.com/amp/s/amp.ft.com/content/e1732e1c-fa7d-11e6-bd4e-68d53499ed71 https://www.google.com/amp/s/amp.ft.com/content/e1732e1c-fa7...
- googlryas 9y ago
  Why aren't these downstream investors pricing accordingly then? Less sophisticated than Bain? Or are Bain's successes enough to mollify any fears about their failures?
- busterarm 9y ago
  They also have a long history of running companies into the ground via LBOs. Just look at Guitar Center. Unfortunately when they explode, they're going to take companies like Gibson and probably also Korg with them. Gibson is already in the process of unraveling right now. Their impending bankruptcy was obvious when they didn't have a booth at NAMM this year. It's absolutely predatory behavior what they did.