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View Diary: Rush Limbaugh's downward spiral promises to accelerate (173 comments)

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  •  I'd like to make three observations... (5+ / 0-)

    (1) As someone else has already stated, the Clear Channel dividend was rather large compared to normal dividends. Why? Because Bain Capital wanted to extract a significant amount of wealth.

    (2) As a private equity company, Bain Capital has numerous properties to manage, and is always seeking to acquire other properties. The 2.2 billion dollars extracted from Clear Channel likely had more to do with some other acquisition that Bain Capital wanted to make, than it had to do with Clear Channel itself. As the ultimate owner, Bain Capital (and another private equity corporation they're partnered with) make all the final decisions. Thus, the special Clear Channel dividend likely made a few very wealthy people ever more wealthy, while not benefiting Clear Channel in any way. That is what the game is all about. (How would you like to work for a corporation where the primary well-being of your corporation is second to the welfare of the people who own it? That's a common circumstance in the world of private equity.)

    (3) We tend to use the terms private equity, and venture capital interchangeably. There are companies that do both, but generally speaking they're not considered the same thing. Venture capital generally refers to starting up, or nurturing new companies. Private equity firms typically deal in existing corporations that are in decline, are in or are facing bankruptcy, or are just ripe for the extraction of their value. Some companies survive the process, many do not.

    A recent article about venture capitalists claimed that they don't like it when the media refers to private equity firm Bain Capital as a venture capital firm. They didn't want to criticize private equity firms, but they see their own mission as something more noble.

    Follow me on Twitter: @denverunionguy

    by Richard Myers on Wed Jul 25, 2012 at 10:27:22 AM PDT

    [ Parent ]

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