I think much of the flak about Bain Capital is not deserved. This group and others may be considered predatory or corporate raiders and some may very well be that. I don’t know enough about Bain to comment, but do know a lot about the turnaround business. I have financed many turnarounds, some with investors, most without; few want to invest in problems. It is a tough business and tough decisions must be made to bring businesses back to profitability. I for one would have a hard time making these decisions; that is why I am not in the business! Many are on a path to bankruptcy because current management also didn’t make those decisions. Some of the questions turnaround guys deal with are:
• Does business have ability to survive given its product line and market for its products
• Will capital help? Throwing good money after bad just delays the inevitable and jobs would be lost anyway
• No matter the outcome, it is better to try than let it die as it is doing. Investing in these businesses is high risk, I am glad there are folks who will do it.
• Sometimes laying off a few saves jobs for many. Tough to do but best for the common good
• If company goes broke everyone loses their jobs • Only government thinks they have endless capital; everyone else has to work to preserve it for future investments that create jobs
As an example, the US could have put more money into Solyndra to save jobs too. But they made the decision that the business couldn’t survive even with more money so they cut off the cash. Maybe rightly so!
I think our government needs to make some tough decisions about debt and spending that are not being made. I am glad there is a turnaround guy in the race and that some of the others understand the need to turn around the government as well.