Author Topic: Hellman & Friedman = Bain Capital? (Read 7943 times)

Karimala · « **on:** January 12, 2012, 01:12 »

Ordinarily I keep politics separate from business, because it tends to achieve nothing other than unnecessary arguments, but after watching the mini-documentary "When Mitt Romney Comes to Town," all I could think was how reminiscent it was of what we're all witnessing happen at IS and Getty since Hellman & Friedman bought out Getty.

FYI - Mitt Romney is the front-running conservative candidate for US president, and is likely to compete against President Obama in the fall for the presidency. For more info about H&F, you can search previous posts here on MSG. Excellent information and thank you to all who posted it.

Borrowing $1.3 billion dollars against Getty's assets (and ours) in order to pay H&F shareholders and investors $500 million is the first clue. Cutting our earnings because our portion of the royalties are "unsustainable" is the second clue. Speeding up production to the point where new features are implemented before they actually work is the third clue (check out the guy who used to manufacture washing machines talk about shipping them out with missing parts). And there's many more clues contained within the documentary that all point to the very real possibility that H&F really is cannibalizing IS for the sole purpose of providing profits for itself, its shareholders and its investors.

Maybe I'm too much of a liberal to be objective about the documentary's message, but I don't think so. What do you guys think?

Edit caused by my cat jumping on my computer and hitting the return button too many times.

Jo Ann Snover · « **Reply #1 on:** January 12, 2012, 01:27 »

disorderly · « **Reply #2 on:** January 12, 2012, 01:59 »

Bain has been referred to recently as a Venture Capital firm by the news media. I believe that's incorrect; they're better described as a private equity firm. VCs invest in companies with growth potential; these guys engage in leveraged buyouts, reaping rewards from the firms they acquire and saddling them with the debt generated by their takeovers.

Years ago I became a fan of the pulp magazines of the early 20th century. A lot of these publishers disappeared because investors realized they had assets that weren't visible on their balance sheets: a lot of old and insanely valuable New York real estate. They bought the publishers, shut them down, sold off the buildings and made one hell of a profit. What we lost as readers is probably just as great as what they gained. I wonder; does that make me a romantic or a Socialist?

Graffoto · « **Reply #3 on:** January 12, 2012, 02:09 »

Yes, it is painfully obvious that H&F are taking Getty (and us) to the cleaners. What more is there to be said?

"Removing inefficiencies", what a lovely phrase. What a crock of crap too.
I worked once for a company that was attempting to become more efficient with something known as 'lean' manufacturing methods. It didn't work. These things rarely do, because humans are by nature inefficient beings. Making a company too efficient takes away from its humanity and unless the whole operation is run by robots, is doomed to fail.

H&F has not the slightest clue what to takes to run an operation that must cater to creatives both on the contributor and buyer side. They don't really care to know. All they want is to wring as much cash as possible from this before they dump the broken lifeless carcass on someone else.

BaldricksTrousers · « **Reply #4 on:** January 12, 2012, 02:25 »

Quote from: disorderly on January 12, 2012, 01:59

I wonder; does that make me a romantic or a Socialist?

Why are you so keen to label yourself?

Karimala · « **Reply #5 on:** January 12, 2012, 02:31 »

Quote from: BaldricksTrousers on January 12, 2012, 02:25

Quote from: disorderly on January 12, 2012, 01:59
I wonder; does that make me a romantic or a Socialist?

Why are you so keen to label yourself?

It's American sarcasm.

BaldricksTrousers · « **Reply #6 on:** January 12, 2012, 02:33 »

Quote from: Karimala on January 12, 2012, 02:31

Quote from: BaldricksTrousers on January 12, 2012, 02:25
Quote from: disorderly on January 12, 2012, 01:59
I wonder; does that make me a romantic or a Socialist?

Why are you so keen to label yourself?

It's American sarcasm.

Thanks. I didn't get it.

etienjones · « **Reply #7 on:** January 12, 2012, 04:27 »

Quote from: BaldricksTrousers on January 12, 2012, 02:25

Quote from: disorderly on January 12, 2012, 01:59
I wonder; does that make me a romantic or a Socialist?

Why are you so keen to label yourself?

Why not a romantic socialist, that's the box I would put myself in . . . . . . . . .

And why label yourself? . . . . well, as they say:

"You got to stand for something or you will fall for anything"

sharpshot · « **Reply #8 on:** January 12, 2012, 04:39 »

There should be government legislation to stop H&F doing this. It seems similar to what Malcolm Glazer has done to Manchester United. Why should a good business with little debt end up in this mess just to provide money to investors? I have no confidence that governments will step in, they failed to keep control of the banking industry and look how that has ended up. Bankers are getting most of the blame but they are only interested in making money, just like hedge funds. They need tighter regulations but governments are too frightened to make the necessary changes.

wut · « **Reply #9 on:** January 12, 2012, 05:07 »

Quote from: BaldricksTrousers on January 12, 2012, 02:33

Quote from: Karimala on January 12, 2012, 02:31
Quote from: BaldricksTrousers on January 12, 2012, 02:25
Quote from: disorderly on January 12, 2012, 01:59
I wonder; does that make me a romantic or a Socialist?

Why are you so keen to label yourself?

It's American sarcasm.

Thanks. I didn't get it.

I think in America socialism is a cuss word, something you say to someone who you wanna both offend and show as unpatriotic (that's what republicans did to Obama during the campaign, for wanting to implement public health care and bring America from the middle ages)

michealo · « **Reply #10 on:** January 12, 2012, 05:31 »

I think the real problem is that when Bruce sold out that he didn't share the spoils with the contributors. That is also the point that contributors should have interceded .....

gostwyck · « **Reply #11 on:** January 12, 2012, 05:50 »

The issue is not unique to private equity funds. GM squandered it's dominance of the world car industry by engaging in a programme of 'shareholder value maximisation' from the mid-80's. These programmes involve cutting cost, minimising investment and distributing profits to shareholders via dividends and share buybacks. It is reckoned that if GM had not spent the $20.4B that it did in share buybacks between 1986 and 2002, and had simply put the money in the bank, it would have had no problem in finding the $35B it needed to stave off bankruptcy in 2009.

Karimala · « **Reply #12 on:** January 12, 2012, 06:57 »

To be clear, I'm not asking for opinions on issues. Nor was I trying to speak to the choir. I'd like to keep those kinds of politics at bay.

I'm wondering if anyone sees the same parallels I do between what happened after Bain Capital bought the companies depicted in the documentary, and what's happening to IS now.

And maybe this stuff is way over my head.

gostwyck · « **Reply #13 on:** January 12, 2012, 07:14 »

Quote from: Karimala on January 12, 2012, 06:57

To be clear, I'm not asking for opinions on issues. Nor was I trying to speak to the choir. I'd like to keep those kinds of politics at bay.

I'm wondering if anyone sees the same parallels I do between what happened after Bain Capital bought the companies depicted in the documentary, and what's happening to IS now.

Of course. I'm not at all surprised at what H&F tried to do. I am however staggered at just how badly they did it and how quickly they appear to have accidently destroyed their own investment.

WarrenPrice · « **Reply #14 on:** January 12, 2012, 10:14 »

Reminds me of "Pretty Woman."

lisafx · « **Reply #15 on:** January 12, 2012, 12:58 »

Quote from: gostwyck on January 12, 2012, 07:14

Of course. I'm not at all surprised at what H&F tried to do. I am however staggered at just how badly they did it and how quickly they appear to have accidently destroyed their own investment.

Yes indeed. The parallels are inescapable. And it is shocking what a poor job they did of the whole thing. I suspect if employees of any of the companies Bain Capital bled dry were here, they would have very similar stories and complaints to share as most of us have about H&F.

cathyslife · « **Reply #16 on:** January 12, 2012, 15:33 »

Quote

"You got to stand for something or you will fall for anything"

Great quote.

cathyslife · « **Reply #17 on:** January 12, 2012, 15:39 »

Quote from: Karimala on January 12, 2012, 01:12

Ordinarily I keep politics separate from business, because it tends to achieve nothing other than unnecessary arguments, but after watching the mini-documentary "When Mitt Romney Comes to Town," all I could think was how reminiscent it was of what we're all witnessing happen at IS and Getty since Hellman & Friedman bought out Getty.

FYI - Mitt Romney is the front-running conservative candidate for US president, and is likely to compete against President Obama in the fall for the presidency. For more info about H&F, you can search previous posts here on MSG. Excellent information and thank you to all who posted it.

Borrowing $1.3 billion dollars against Getty's assets (and ours) in order to pay H&F shareholders and investors $500 million is the first clue. Cutting our earnings because our portion of the royalties are "unsustainable" is the second clue. Speeding up production to the point where new features are implemented before they actually work is the third clue (check out the guy who used to manufacture washing machines talk about shipping them out with missing parts). And there's many more clues contained within the documentary that all point to the very real possibility that H&F really is cannibalizing IS for the sole purpose of providing profits for itself, its shareholders and its investors.

Maybe I'm too much of a liberal to be objective about the documentary's message, but I don't think so. What do you guys think?

Edit caused by my cat jumping on my computer and hitting the return button too many times.

And just to be fair, that documentary was paid for by winning our future dot com. That organization is supporting Newt Gingrich. Here is a quote from the About page:

Quote

Winning Our Future means nominating Former Speaker Newt Gingrich for President in 2012. And advancing that goal is what Winning Our Future is all about.

Perhaps the facts in the documentary are correct (I have not watched it yet). But I'm just saying, it would be wise to consider that the "facts" in the documentary may not really be "facts." I don't know enough about these candidates to say one way or another.

Karimala · « **Reply #18 on:** January 12, 2012, 15:44 »

Thanks for pointing out the PAC's involvement. I meant to say something about it, but forgot.

Also, the documentary was made by a guy who worked on Romney's 2008 presidential advertising campaign. Curious as to why he'd make such a scathing documentary.

heywoody · « **Reply #19 on:** January 12, 2012, 15:48 »

Successful companies are usually started by someone (or someones) with a vision. Sometimes they get bought out or just hand strategic decisions over to the bean counters who only look at the bottom line and forget what it was that brought success in the first place.

cathyslife · « **Reply #20 on:** January 12, 2012, 16:31 »

Quote from: Karimala on January 12, 2012, 15:44

Thanks for pointing out the PAC's involvement. I meant to say something about it, but forgot.

Also, the documentary was made by a guy who worked on Romney's 2008 presidential advertising campaign. Curious as to why he'd make such a scathing documentary.

No problem. I have been hearing about Romney and Bain Capital, but it's typically on one of the adverts on TV running now. But if Romney worked for a company whose purpose was to do the exact same thing as H&F, then I would agree that the Bain Capital and the istock debacle is similar.

Karimala · « **Reply #21 on:** January 12, 2012, 16:34 »

Quote from: cclapper on January 12, 2012, 16:31

Quote from: Karimala on January 12, 2012, 15:44
Thanks for pointing out the PAC's involvement. I meant to say something about it, but forgot.

Also, the documentary was made by a guy who worked on Romney's 2008 presidential advertising campaign. Curious as to why he'd make such a scathing documentary.

No problem. I have been hearing about Romney and Bain Capital, but it's typically on one of the adverts on TV running now. But if Romney worked for a company whose purpose was to do the exact same thing as H&F, then I would agree that the Bain Capital and the istock debacle is similar.

You should watch the video. The parallels are astounding. I felt like I was listening to folks from MSG talking about IS.

Somewhere around here, Jo Ann provided a link to an article about H&F's $1.3 billion loan against Getty. Bain Capital is mentioned in the article, too. I'll have to see if I can dig it up again.

cathyslife · « **Reply #22 on:** January 12, 2012, 16:55 »

Quote from: Karimala on January 12, 2012, 16:34

You should watch the video. The parallels are astounding. I felt like I was listening to folks from MSG talking about IS.

Somewhere around here, Jo Ann provided a link to an article about H&F's $1.3 billion loan against Getty. Bain Capital is mentioned in the article, too. I'll have to see if I can dig it up again.

Just watched some of it. You are right, it's very parallel. But one line struck me. One of the employees that worked at the Unimac company said "in the end, they decided to close the plant anyway."

So do you think H&F has reaped their profits, and now things are just being tidied up, i.e. pretty much shut istock down?

Sadstock · « **Reply #23 on:** January 12, 2012, 17:05 »

I used to work for a company that made very high end technical equipment. When I started we had an office in Australia with about 10 people in it.

The manager of that office came to HQ for meetings and I took him to dinner. Don't know why he told me this, but according to him the Australian office was originally an independent distributor that he purchased with the idea that he could sell off the inventory in Australia at bargain basement prices, shut down the operation, fire the staff and still come out ahead. In other words pull an H&F.

Turned out he was wrong. He could not even come close to breaking even, so he sold the company to my company and then became an employee. He was stuck managing the vary people he had planned to fire and hated it.

At least in this case the predator got screwed.

cathyslife · « **Reply #24 on:** January 12, 2012, 17:11 »

Quote from: Sadstock on January 12, 2012, 17:05

I used to work for a company that made very high end technical equipment. When I started we had an office in Australia with about 10 people in it.

The manager of that office came to HQ for meetings and I took him to dinner. Don't know why he told me this, but according to him the Australian office was originally an independent distributor that he purchased with the idea that he could sell off the inventory in Australia at bargain basement prices, shut down the operation, fire the staff and still come out ahead. In other words pull an H&F.

Turned out he was wrong. He could not even come close to breaking even, so he sold the company to my company and then became an employee. He was stuck managing the vary people he had planned to fire and hated it.

At least in this case the predator got screwed.

Great story. I love your line "pulled an H&F".

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Author Topic: Hellman & Friedman = Bain Capital? (Read 7943 times)

Karimala

Jo Ann Snover

disorderly

Graffoto

BaldricksTrousers

Karimala

BaldricksTrousers

etienjones

sharpshot

wut

michealo

gostwyck

Karimala

gostwyck

WarrenPrice

lisafx

cathyslife

cathyslife

Karimala

heywoody

cathyslife

Karimala

cathyslife

Sadstock

cathyslife

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