lx43
11-14-2011, 03:42 PM
http://www.forbes.com/sites/stevedenning/2011/11/14/was-romneys-turnaround-of-dade-a-triumph-or-a-smoking-gun/
A short glimpse of what is ahead for the nation if Romney is elected president. First he charges a huge fee for doing nothing, then puts us in a mountain of debt, and followed by collapse into bankruptcy.
What is interesting about the Dade story is that Romney structured the deal in ways that almost guaranteed that he and his partners would come out ahead.
For a start, they paid themselves nearly $100 million in fees, first for buying the company and then for helping to run it. In this way, even if Romney and his colleagues had lost their entire investment of $30 million, they would still have come out ahead.
In 1999, in the absence of a satisfactory offer for the purchase of Dade, Romney had Dade take on loans so that it could buy out half the shareholders. As a result, Bain extracted $242 million out of the business shortly before it went bankrupt.
By leveraging the company so highly in order to pay out Bain, Romney exposed Dade to high risk. When there were some hiccups (the euro declined, interest rates rose, a facility was delayed), Dade went bankrupt.
B]
Two types of managers[/B]
What we do learn from the article is which of the two types of manager Romney was as he approached his work as a turnaround manager.
Managers of the first type look after themselves first, while letting the chips fall where they may, when it comes to workers and creditors. They treat others as collateral damage on their inexorable path to success.
Managers of the second type focus first on the customers and the long term interests of company and only cash in their own chips if the customers and the company as a whole prosper.
As we saw in the case of banking, managers of the first type often leave a path of bankruptcy and broken dreams in their wake. Based on the information in this article at least, Romney’s stint at Dade falls into this first category.
A short glimpse of what is ahead for the nation if Romney is elected president. First he charges a huge fee for doing nothing, then puts us in a mountain of debt, and followed by collapse into bankruptcy.
What is interesting about the Dade story is that Romney structured the deal in ways that almost guaranteed that he and his partners would come out ahead.
For a start, they paid themselves nearly $100 million in fees, first for buying the company and then for helping to run it. In this way, even if Romney and his colleagues had lost their entire investment of $30 million, they would still have come out ahead.
In 1999, in the absence of a satisfactory offer for the purchase of Dade, Romney had Dade take on loans so that it could buy out half the shareholders. As a result, Bain extracted $242 million out of the business shortly before it went bankrupt.
By leveraging the company so highly in order to pay out Bain, Romney exposed Dade to high risk. When there were some hiccups (the euro declined, interest rates rose, a facility was delayed), Dade went bankrupt.
B]
Two types of managers[/B]
What we do learn from the article is which of the two types of manager Romney was as he approached his work as a turnaround manager.
Managers of the first type look after themselves first, while letting the chips fall where they may, when it comes to workers and creditors. They treat others as collateral damage on their inexorable path to success.
Managers of the second type focus first on the customers and the long term interests of company and only cash in their own chips if the customers and the company as a whole prosper.
As we saw in the case of banking, managers of the first type often leave a path of bankruptcy and broken dreams in their wake. Based on the information in this article at least, Romney’s stint at Dade falls into this first category.