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1/9/12

Thinkprogress Misquotes Wall Street Journal In Attack On Bain Capital

Romney’s Bain Capital Made Billions While Bankrupting Nearly One-Quarter Of The Companies It Invested In

Here is the quote that the George Soros rag uses to get its headline:

The Wall Street Journal, aiming for a comprehensive assessment, examined 77 businesses Bain invested in while Mr. Romney led the firm from its 1984 start until early 1999, to see how they fared during Bain’s involvement and shortly afterward.

Among the findings: 22% either filed for bankruptcy reorganization or closed their doors by the end of the eighth year after Bain first invested, sometimes with substantial job losses. An additional 8% ran into so much trouble that all of the money Bain invested was lost. [...]

The Journal analysis shows that in total, Bain produced about $2.5 billion in gains for its investors in the 77 deals, on about $1.1 billion invested. Overall, Bain recorded roughly 50% to 80% annual gains in this period, which experts said was among the best track records for buyout firms in that era.

It is false to claim that Bain bankrupted 22% of their companies. The study only looked at a sample of 77 dealings, not all the dealings. So it turns out that Bain made billions of bankruptcies within the 77 businesses that WSJ examined?

Well that isn't true either. The actual analysis from WSJ found that from the 77 companies they examined, Bain made billions from all of them, the successes and failures. Thinkprogress snipped the quote to make it sound like Bain made billions off the of bankruptcies. Not true. How could that be true? Thinkprogress claims that Bain would "invest in companies, leverage them up with debt, and then sell them off for scrap, allowing Bain’s investors to walk away with huge profits." But how is that possible? How could you buy a company in trouble, load them up with debt, and then sell them off for profit? Who would be stupid enough to buy those companies? Besides the federal government of course...

Bain's business was is solving companies that were in trouble. Sometimes the companies were in so much trouble that they had to declare bankruptcy up to 8 years after Bain took them on. Sometimes they had to slim expenditures by laying people off. Sometimes they had to go belly up and cut their losses.

Bankruptcy is a step that many companies in trouble do. It is shocking to me that only 22% took that step. Of course they laid people off. Most companies in trouble need to let people go in order to get back on track. That's how the world works. It is shocking that more people didn't have to get laid off. Hopefully Romney lays off a lot of people in Washington. Hopefully he cuts a lot of the bureaucracy.

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