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Response to kpete (Original post)

Thu Sep 27, 2012, 10:13 AM

9. I wish the term "harvest" was as damning as it initially sounds, but this is the typical meaning in

private equity, as taken from Private Equity: History, Governance, and Operations:

A "harvest" or "exit" is an event whereby the investors and management of a company sell at least a portion of their shares to public or corporate buyers. The harvest provides an opportunity for private equity (PE) funds to realize returns for their investors, while enabling managers with equity stakes to have a "liquidity event" for their shares -- in other words, an opportunity to sell their shares by making them "liquid."

Along these lines, there are three primary methods by which PE funds harvest companies: initial public offerings (IPOs), mergers, and acquisitions. The latter two exit methods (discussed in subsequent chapters) are frequently discussed in parallel and are collectively known as M&A transactions.



So "harvest" is essentially a neutral term.


What was harmful to many of the companies Romney acquired when he ran Bain Capital was the way he acquired them -- maximizing the use of leverage, as this Bloomberg article explains, which loaded the companies with debt, socialized the risks and privatized the profits:

http://www.bloomberg.com/news/2012-07-15/romney-s-bain-yielded-private-gains-socialized-losses.html

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