Leveraged buyout is some class A rich people bullshit.
"I'd like to buy this company"
"How are you going to pay for it?"
"WIth the company I want to buy"
"Fine"
What the gibbering fuck is that all about?
It’s just finance bros speculating on and destroying actual business ventures.
The impact on rank and file workers has always been apparent, but we pretend that we cannot see how much it distorts commerce and rational market outcomes.
I still don't understand what a reverse mortgage is, but the name sounds scamy as fuck, and Burt Reynolds has to tell me it's "not a scam to steal your home." In the commercial.
So it's definitely, 100%, a scam.
It's just exactly what it sounds like - rather than borrowing money to pay off a house you're borrowing money against your house and getting a new mortgage out of it.
I now understand why I barely got through accounting in high school. All this time I thought I was slow, turns out capitalist accounting literally makes no sense
Then I will pretend to lead the company despite possessing NO relevant skills or knowledge for that job, and then sell it off for pennies on the dollar after I run it into the ground.
Nope, just asset-strip the company, pocket the cash from the assets, and leave the company with only the debt that was used to buy it. The company files for bankruptcy, and you just walk away.
No, but you can strip the physical assets the company has--such as sell the land that they own--often to yourself/another company you own--then lease it back to the original company.
Then eventually have that company declare bankruptcy because, gosh darn, they couldn't pay off the debt.
And now other companies you control have the land and physical assets, and the debt's gone because the company that had the debt went through bankruptcy, so you got land and assets for Negative Dollars.
TADAAAAAHHHHHHH
Did you see how Sears stores totally got better and more awesome over the last 20 years? That's the model.
Make them suck, sell off the real estate, sell the company
Your mistake is thinking these people care about running a retail business. The business is to make as much money, as they can, as quickly as possible.
Sorry , I was being sarcastic, they purposely let the stores suck for sooo long while malls also died, there's only value in the real estate now.
Hard to even find a Sears open now.
I'd like to buy this company"
"How are you going to pay for it?"
"WIth the company I want to buy"
"Fine"
This is, to a certain extent, every business loan
This is also quite similar to how home mortgages work….
Take on a big loan, which gets attached as a lien on the house, and if it doesn’t get paid off, the house goes with the debt.
Except the payments on the loan come from the buyer, not the house. If the buyer fails to repay, their credit rating takes the hit and they find it difficult to get loans in the future.
You could choose to rent out the house instead of living in it, and it would amount to the same thing.
The buyer’s reputation for non-payment takes a hit in the business world too. Banks track ownership behind corporate shields as part of their risk calculations.
No, the mortgage payments come from my bank account, not the house's, regardless of whether I rent it or earn a salary. My personal finances are at stake; personal bankruptcy is not corporate bankruptcy.
Bain Capital sent Kaybee Toys to bankruptcy; they're not having any trouble getting loans.
KB went through some Chapter 11s, which are “reorg” bankruptcies, not “insolvency” bankruptcies. Bain lost all control and the (relatively small) cash stake it’d invested.
KB still had real estate and other assets that were sold.
By itself, it’s not an indication banks lost much.
(This is not to say Bain weren’t raiders in that case. But also consider it’s one of many, many deals Bain did/does. They’ve got LOTS of credit history for banks to look at.)
> The buyer's rep takes a hit in the business world
See, that's why you have a third company involved, to actually do the buying, another disposable middle man she'll that can take that reputation hit.
