'I'm sick to my stomach': anger grows in Illinois at Bain's latest outsourcing plan

[jmowreader]

34. If they were like most LBO victims...well, most of them

Mitt wouldn't have been interested in a truly troubled company because they probably couldn't afford to pay Bain's fees. He MIGHT have bought a company to close it if they had a product that would fit into one of his other companies, but as far as resurrecting a company that is in real trouble? No. No matter what Mitt says, he wouldn't have done that.

LBO artists have a different definition of "troubled company" than the rest of us. Most LBO victims were taken private because the stock was trading lower than the company's management wanted it to. Prime example: RJR Nabisco. The management of RJReynolds Industries merged their company with Nabisco Brands because Reynolds, even though it had many food lines (they owned Del Monte and the company that makes Hawaiian Punch), traded as a tobacco company. After the merger, they still traded as a tobacco company. So, because the RJR Nabisco stock price was seven times earnings per share rather than 22 times earnings per share, it made perfect sense to take the company private.

The thing is, RJR Nabisco was a very successful, very profitable company. Think for a minute: how many of their products do you have in your house? Maybe some Oreos, a box of Ritz, Animal Crackers, some A-1 steak sauce? EVERYONE uses at least a couple of the products that company makes. They could have soldiered on as a combined company and thrived forever...but because someone didn't like where the stock was trading, the world had come to an end.