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CICEROSC

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    CICEROSC reacted to Ninth Doctor in Private Equity Firms Want Their Acquisitions To Profit, Not Fold [Inve   
    There’s a conversation in Atlas Shrugged, I think it’s the guy who was in charge of Starnesville speaking to Dagny, where he talks about the reason one would buy a company: to drain everything out of it. As I recall the scene ends with him realizing he’s burned his dinner, maybe that’ll help with finding the scene. Also, if you watch the movie Wall Street (wow I can hear the groans of fellow OOers all the way from here!), the way Charlie Sheen’s character motivates Gordon Gekko to buy out Martin Sheen’s failing company is by pointing out that they have an overfunded pension, which Gekko proceeds to loot thus turning Sheen against him. I spent a good part of my early career working for a “corporate raider”, confidentiality agreements prevent me from naming names or giving detailed examples, but suffice to say, speaking from experience, these things do happen. Sometimes you can “make” a lot of money by putting a company out of business, and that’s just part of capitalism. It's part of what's called "creative destruction" in certain circles.

    On the “mature companies” part, back during the dot-com bubble it was private equity firms that usually funded startups, with the aim of making a big pile once the companies went public. So, “typically”, well, what qualifies as “typically”?
  2. Like
    CICEROSC reacted to Nicky in Private Equity Firms Want Their Acquisitions To Profit, Not Fold [Inve   
    I have limited knowledge of bankruptcy proceedings, but wouldn't a Bankruptcy Court order the PE company to pay back the money to the creditors, if they did that?

    Otherwise, starting businesses just to load them up with debt would be all everyone did. It would be the easiest way to make money.
  3. Like
    CICEROSC got a reaction from aequalsa in Private Equity Firms Want Their Acquisitions To Profit, Not Fold [Inve   
    I would have to go back and reread to go into detail, but I think I can summarize. One of the main issues is a PE tactic of loading up a target company with debt that cannot and knowingly will not be repaid, and then using the proceeds of that debt issue to pay big "management fees" to the Private Equity company. This results in a payoff to the PE owner in excess of the amount "invested." Such a pattern appears fairly commonly, and the point to look for is that these equity extractions are not being made in order to fund new capital, new equipment, new strategies, etc -- the extractions are taken out and paid to the PE as profit with no pretense of "re-investing" them in the operation of the target company.

    This is the problem with the common conception that all PE's are acting as "turnaround specialists" by investing money and knowhow into a failing company with the goal of turning it around and getting it to operate profitably and successfully in the future. Sometimes that is in fact the case. On the other hand, sometimes, as detailed in the Kosman book, the facts are such that no objective observer would conclude that the PE entered the business in order to turn it around. Instead, the financial transactions, to the extent they are public knowledge, evidence the conclusion that the goal from the beginning was to pull out all avalable cash (and even new cash through debt and otherwise) and then send the company into bankrupty.

    The details are all very fact-specific to individual deals. There are indeed many "turnaround" deals that are legitmate in any fair-minded person's book, and those are the ones where the "win some / lose some" argument applies.

    On the other hand, if you do the research you will see that there are deals where the overwhelming circumstances do not point to a good faith effort to turn around a company. Now in those cases one can argue (correctly) that the activities of a vulture in scavenging what's left of a dead body serve a legitimate purpose. The real issue becomes when a PE firm goes in with the representation to all concerned that it is acting to achieve a turnaround, when it's real purpose is to extract all available equity, obtain new debt under "false pretenses", and then bankrupt a company that would otherwise have continued to survive at least for some period of time. Many types of ethical issues are raised in this fact pattern in addition to the deception that is involved. I do not think that it violates objectivist principles to be concerned about the effect on long-term employees of such a company who have themselves operated under the representation that the owners intended that it remain a going concern. I would think that Nat Taggart inspired his workers to their own best efforts by his clear determination to build the best railroad he possibly could, and that his employees made decisions in their personal lives based on those representations.

    Again, I do not want to be perceived as bashing the main article. The point it makes applies to many cases and maybe even a majority. But I do want to make a point to those who might find themselves debating this issue, perhaps even live in a political or other debate, that there are intricacies to certain deals which can be difficult to defend.
  4. Like
    CICEROSC reacted to Leonid in Objectivist view on Animal Abuse Laws   
    Animal is a living being -that is a self-sustained entity which is able to generate a goal-orientated action when the goal is its own life and wellbeing. In this regard animals and men share common values. Any action which undermines this ability in fact undermines the standard of value which is life itself. This is true that there is a hierarchy of values and man's life takes a preference over the life of animal. However it is difficult to see how the mindless brutality against animals could promote man's interests and goals. If anything-it does the exactly opposite.
  5. Like
    CICEROSC reacted to whYNOT in Objectivist view on Animal Abuse Laws   
    SapereAude,

    We well know that occasions arise when doing the legal (under individual rights)thing
    may not be the moral; in this case, I think it's the opposite way round.
    The moral act would be to do as you would do - to save a (non-rights bearing) animal from its
    malicious owner, by force, if necessary
    Any objective court would not condone your action - but would also pass a sentence on you
    that would amount to nothing more than a slap on the wrist - I believe.
    Morality transcends rights, and is derived from value of life. Rights are a social code,
    not a guide to morality.
  6. Like
    CICEROSC reacted to Leonid in Objectivist view on Animal Abuse Laws   
    Dragon lady: "So is a cockroach. Anyone want to state that someone who kills a beloved cockroach ought to be faced with a jail sentence? No?"

    No. Cockroach is not conscious. So are plants and sea urchins and other low forms of life. As for the legal question-I think that any case of severe unusual cruelty to the animals should be punished. Such a cruelty is a hallmark of psychopath who doesn't give a damn about any living thing-animal or human. What you'd do to a creature who put a kitten into the microwave oven and fried it alive? ( a real case)? Would you just give him a warning and let him be? In my view he is a danger to society and should be incarcerated if not in jail, then in psychiatric institution. Such a person in fact could be hardly called a human.
  7. Like
    CICEROSC reacted to Leonid in Objectivist view on Animal Abuse Laws   
    They are many properties in animals which we can value and even admire. Ayn Rand herself loved cats. She also mentioned that even animal life deserves some respect as a value-orientated process. It is an altruism which dehumanizes and causes cruelty because for an altruist to value means a sacrifice. Thus a false dichotomy-to sacrifice oneself to others or others (humans or animals) to oneself.

    "The men who accept that dichotomy but choose its other side, the ultimate products of altruism's dehumanizing influence, are those psychopaths who do not challenge altruism's basic premise, but proclaim their rebellion against self-sacrifice by announcing that they are totally indifferent to anything living and would not lift a finger to help a man or a dog left mangled by a hit-and-run driver (who is usually one of their own kind)."

    "The Ethics of Emergencies", from The Virtue of Selfishnes
    By definition animals don't have rights, but nevertheless the cruelty to animals is deeply immoral. it undermines the Objectivist standard of value which is life itself.
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