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The Buyout of America: How Private Equity Is Destroying Jobs and Killing the American Economy Paperback – Bargain Price, November 30, 2010

4.2 out of 5 stars 20 customer reviews

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Paperback, Bargain Price, November 30, 2010
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Editorial Reviews

About the Author

Josh Kosman has been covering the financial industry for twelve years. He is a business reporter at The New York Post, and has previously been an editor at Mergermarket.com, a senior writer for The Deal and senior reporter for the trade publication Buyouts Newsletter. He appears frequently in the media as a private equity and mergers expert. He lives in Brooklyn, New York.

From Publishers Weekly

With exhaustive research and a rogues' gallery of interviews, journalist Kosman puts together a convincing and disquieting argument that private equity firms are about to cause the next great credit crisis. Many people don't realize that private equity is just a new name for a leveraged buyout, and that private equity firms make their money by loading their acquired companies with debt, garnering short-term gain at the cost of the businesses' financial longevity. Exposing the pernicious practices of various high-profile firms (including Mitt Romney's company, Bain Capital, notorious for its company-destroying practices), Kosman reveals how they cripple their acquired businesses competitively, limit growth and cut jobs without reinvesting the savings, all without even generating good returns for their investors. But if only half of PE-owned businesses go bankrupt, that would leave almost two million Americans out of jobs. What's to be done? Kosman is a proponent of legislation that encourages buyers of companies to hold on to them for at least five years. This alarming book will keep anxious credit watchers on their toes—and hopefully inspire some pressure to keep PE firms from going the way of mortgage brokers. (Nov.)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. --This text refers to an alternate Paperback edition.

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Product Details

  • Paperback: 288 pages
  • Publisher: Portfolio Trade (November 30, 2010)
  • Language: English
  • ISBN-10: 1591843693
  • ASIN: B005DI8VK0
  • Product Dimensions: 5.6 x 0.8 x 8.5 inches
  • Shipping Weight: 8.8 ounces
  • Average Customer Review: 4.2 out of 5 stars  See all reviews (20 customer reviews)
  • Amazon Best Sellers Rank: #2,092,220 in Books (See Top 100 in Books)

Customer Reviews

Top Customer Reviews

By Robert Morris HALL OF FAMETOP 500 REVIEWERVINE VOICE on November 16, 2009
Format: Hardcover
In the Introduction, Josh Kosman offers what he calls a "little primer" on how private equity firms operate, explaining that they "buy businesses the way that homebuyers acquire houses. They make a down payment and finance the rest. The financings are structured like balloon mortgages, with big payments due at some point in the future. The critical difference, however, is that while homeowners pay the mortgages on their houses, PE firms have the businesses they buy take out the loans, making THEM responsible for repayment. They typically try to resell the company or take it public before the loans come due." It soon gets even more interesting. "As long as the PE firms could refinance, or turn around and sell off their holdings before the biggest loan payments came due, spectacular flameout bankruptcies could be avoided...PE firms would like to have us all think the reason they try so hard to raise earnings in their businesses [by `starving companies of operating and human capital'] is so that companies can use these profits to pay down the money they borrowed to finance their own acquisitions. But the records show that during the 2003-7 buyout rush, that wasn't generally the case. Instead, they used the profits s a basis to borrow more money. The new loans, which were piled in top of the original debt taken on to finance the LBO, were used to issue dividends" to the (you guessed it) PE firms. What if all, most, or even only some of the companies collapse? No problem. The PE firms have incurred no debt while receiving dividends as well as substantial management fees. "Despite the credit crisis in 2009," Kosman notes, "PE firms are sitting on roughly $450 billion in unspent capital and itching for more deals." Of course they are. Given their circumstances, would wouldn't?Read more ›
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Format: Hardcover
Josh Kosman writes as a journalist experienced in coverage of Wall Street and other large financial deals. He brings his extensive journalistic background of about 10 years data gathering to bear in this sweeping indictment of Private Equity (PE) firms.

Kosman has a mountain of data and stories to tell which clarify the dangers PE firms impose on our economy. It's not just the 10% of American workers that are either terminated or extremely overworked being affected. The investors marshaled by the PE management also often come up short - losing money in pension funds, investment bank loans and other macro-economic areas that further hurt the economy.

The author provides names and extensive details making his book a strong opening salvo for the discussion he wants to bring the American people (and others) into. He has a web site listed in the book that is also for this purpose. Kosman predicts that defaults on PE investment loans between 2012-15 will lead to the next credit crisis and it is about the same size as the mortgage crisis we are in now. The same easy lending policies that allowed subprime loans for houses also funded massive leverage buyouts via PE financiers. The PE financiers are so greedy in Kosman's account that it is incredible, yet he backs it up pretty convincingly. The lavish lifestyle and cavalier attitude towards society of LBO kings is pretty well known anyway, but this book details the savage business practices that leave a wake of destruction where only the PE interests are assured of walking away whole.

It is amazing how much these PE financial wizards get away with in Kosman's accounts and that leads to what I think is the books' primary weakness.
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Format: Hardcover Verified Purchase
Ive read alot of books this year, this one is tops.

Very well written; very well researched. Makes an excellent case
for the chaotic influence of private equity on our economy.

The chapter on what private equity did to the mattress industry is a major eye opener. You can't believe what you're reading, and PE is so pervasive it is really scary.

Author really talented guy. Obviously a guy with some integrity who "chose" to avoid a career in PE.

And if you're thinking about voting for Romney;
you might read chapter 6.

Wow -- it's hard to believe this guy is still credible as a businessman and/ or job creator.

Great book. Wish I'd read it sooner.
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Format: Hardcover
Josh Kosman's The Buyout of America: How Private Equity Will Cause the Next Great Credit Crisis is a must-read for anyone who wants to understand just what private equity firms really do, the disastrous effects they have had on American business, and how the massive debt loads they leave in their wake are yet another financial time-bomb waiting to implode. Well researched and written with great detail and clarity, this book serves both as a highly educational primer and a warning of what may lie ahead for all of us.

When Kosman describes what PE firms actually do, what comes to mind is the scene from the gangster film Goodfellas where Ray Liotta's character relates what happened when the mob 'invested' in another character's restaurant business and proceeded to milk it dry, load it up with all kinds of debt and then burn it down to collect the insurance money. The only real difference between that and what PE firms do is that PE firms do it legally. The mindset, however, is exactly the same.

Highly recommended for anyone with an interest in learning about just what private equity firms do and why it matters.
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