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The Buyout of America: How Private Equity Will Cause the Next Great Credit Crisis
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The Buyout of America: How Private Equity Will Cause the Next Great Credit Crisis

3.52  ·  Rating Details ·  89 Ratings  ·  17 Reviews
An authoritative exposé of the mysterious and potentially dangerous world of private equity.

Few people realize that the top private equity firms, such as Blackstone Group, Carlyle Group, and Kohlberg Kravis Roberts, have become the nation’s largest employers through the businesses they own. Using leveraged buyouts that load their acquired companies with loans, private equ
Hardcover, 280 pages
Published November 12th 2009 by Portfolio Hardcover (first published 2009)
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Sep 25, 2010 Lobstergirl rated it liked it
Shelves: business-finance
When the bad press about LBOs (leveraged buyouts) and the destruction they left in their wake made LBO a dirty acronym, the industry gave itself a new name: private equity. Private equity firms like to pretend that they make companies leaner, stronger, and more efficient, but what they do most of the time is make them leaner, weaker, starve them of capital (the capital they suck out goes into dividend payouts) while saddling them with debt, emphasize short-term over long-term profits, fire lots ...more
Jul 10, 2010 Daniel rated it really liked it
A very interesting look around the next corner of the financial crisis where few (if any) analysts/economists/pundits have yet even discerned that there is weakness. Kosman does a very good job laying out the nature of Private Equity companies and showing direct examples of the harm they have done in the past before making his case for the powder keg they appear to be lighting in the present. Of particular interest is how these PE/LBO (leveraged buyout) entities are able to harm normally product ...more
Dec 17, 2012 Kunal rated it liked it
This was an extremely enlightening book as it is written by a writer for Merger market at the end of 2009 that has taken a very negative approach towards the Private Equity industry in general. He walks through a number of buyouts where the private equity firm’s strategy was to strip out the costs (shed staff, cut R&D spend) and increase cash flow (increase pricing, sell off business’s) etc. While these strategies did increase the cash flow generation of these companies, this cash flow was t ...more
Brian Morton
May 21, 2012 Brian Morton rated it really liked it
Another depressing book about what is affecting today's economy. It shines light on the exploitation of a tax loop hole by Private Equity Firms (which should be called Parasitic Greed Mongols). Essentially what these firms are doing is buying companies and striping them down by selling off assets, laying off workers, reducing R&D spending, and reducing/degrading services provided. After stripping the company they are able to show large (short time) profits. They then present extrapolated pro ...more
Dec 20, 2009 Emily rated it really liked it
Shelves: non-fiction
Frightening book...

Mr. Kosman predicts another financial meltdown in the American economy, circa 2012-ish, this one due to the enormous weight of debt on companies which have been bought out by private equity (PE) firms using leveraged buyouts (LBOs). He backs up his assertions with a great deal of research and detail, enough that I had to reread some passages several times to make sure I comprehended the financial finaglings going on. And I've got an MBA. So take your time working through the m
Yifan (Evan) Xu (Hsu)

  长久以来,国外私募的主要业务是在二级市场上进行杠杆收购。杠杆的比例大致在60%-80%区间内。本书作者认为私募的杠杆收购对经济和社会有着负面影响,目前私募的存量收购业务中的风险隐患甚至和可以和2008年的次贷危机相提并论。其主要论据来自于两个方面:第一,若经济出现下滑,高杠杆的负债若无法得到偿还,会导致银行坏账增加或债券市场的萎靡;第二,收购后,被购企业往往会出现大量裁员、资产变卖、甚至破产,因此私募的杠杆收购在毁灭价值。这两点都会对经济状况和社会稳定造成极大的负面影响。作者同时给出了一些数据,这里举两个例子:一、2001-2008年,美国私募完成3200起杠杆收购,总金额为1.2 万亿美元;二、截止2009年,美国私募控股企业的就业人口为8百万,其中大约25%的员工会因私募的重组而丢掉饭碗,造成大约2百万人失业。
  但实际上,作者是报道杠杆收购的报纸的编辑,并不了解杠杆收购业务的本质;他提及的两个论据牵强附;他对数据解读也有问题。先看数据, 1.2万亿美元的金额是累计发生额,不是存量,因此该数据对现时经济的影响无从得知;而且8百万就业人口包括已经发生过裁员企业的员工,那么
Jan 25, 2010 itpdx rated it really liked it
Shelves: non-fiction
In retrospect, when mortgage credit disintegrated, we saw that there had been a few voices raised in warning. Kosman is raising a voice about the next credit catastrophe.
Private equity (PE) firms went on a buying binge in the late 90's and early 00's. They had the companies that they bought borrow most of the money the PE firms used to buy them. The banks that lent the money applied less than rigorous standards in approving the loans because they would resell them (sound familiar). The PE firms
Jul 30, 2016 Ed rated it liked it
This is a good, short (78,000 words), critical analysis of the private-equity industry.

Kosman goes out of his way to treat his subject & interviewees fairly, but he strongly disapproves of the industry:

"I believe the record shows that PE firms hurt their businesses competitively, limit their growth, cut jobs without reinvesting the savings, do not even generate good returns for their investors, and are about to cause the Next Great Credit Crisis. Leadership is needed to rally opposition to
Jan 14, 2010 Davis rated it liked it
Basic premise of the book: there's another credit crises on the horizon, though slightly smaller than the housing bubble that just passed. This time it is the buying of companies by Private Equity firms, who force the companies being bought to assume debt up to 80% of the purchase price. This debt is scheduled to come due starting 2012 and if credit markets don't improve, then we may see many of these companies going BK, unable to rollover the debt. It's about $1.2 trillion in debt and 2.5 milli ...more
Jan 25, 2011 Mariellen rated it liked it
Another alarming book on the state of our economy. This book, along with the other books on recent developments on Wall Street, have made me want to take all of our money out of the stock market and put it in Treasury bills.

I didn't think the book was especially well written even though I found the topic riveting. The author tended to repeat himself and sounded alarmist. Indeed it's a very disturbing scenario -- over borrowing by corporations will lead to another credit crisis when the loans co
Ralph Orr
An important economic and social topic. However, I care not for journalistic-style books: which are filled with personal stores. This is not biography or history. So I skipped much of the text, and still understood his main points; that historically the majority private equity deals have lead to the bankruptcy of the companies taken-over, while simultaneously enriching the private equity firms. American workers others suffer greatly. Rarely does a taken-over firm emerge better off for the long-r ...more
Thom Slattery
Mar 24, 2015 Thom Slattery rated it liked it
Good overview on how LBOs work and the damage some have caused to the economy. The language was easy enough to understand without a strong background in economics. While I frequently had to re-read sections to fully get the deals and how they proceeded, the book was light enough that it didn't feel like dragging.

I would have preferred some more in-depth analysis comparing the fates of these companies and those that were not taken over by private equity. In many cases it was hard accept the judgm
Apr 20, 2010 Chris rated it really liked it
I was very impressed with the attention to detail in this book. Its rare to find a journalist who trusts his readers enough to give technical summaries of his subjects. Without understanding the legal and financial aspects of these LBOs it would have been difficult to comprehend the breadth of the problem.
John Beverley
Nov 07, 2014 John Beverley rated it it was amazing
Shelves: business-finance
Other reviewers have perceptively understood the mechanics of this industry. Despite all the hype characterizing it as a savior of business, when you understand how all the stakeholders are compensated, you learn how few of them come out ahead. Follow the money. As a component of my ongoing business and finance education, this is a foundational tome.
Tor Lundgren
Oct 17, 2012 Tor Lundgren rated it really liked it
Good stuff. Made it crystal clear that if you buy a company and load it up with debt, you a) eliminate taxes on profits (because there are no profits after interest payments), and b) you have a big pile of cash to pay the shareholders (mostly yourself) big dividends and healthy 'management' fees. Super 'business' model... and another strong case for better, and simpler, tax code.
Nov 30, 2009 John rated it it was ok
Didn't finish.
Paul Ohlson
Dec 06, 2012 Paul Ohlson rated it it was amazing
Such an eye-opener!
John May
John May rated it it was amazing
Feb 18, 2013
Mike Sharp
Mike Sharp rated it it was ok
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