Free Republic

<p>Thomas Lee, inventor of the LBO shoots himself in his office. For a lot of people who used to work for good companies bankrupted by Lee, there is at least poetic justice.</p><p>Thief and a coward. Well, bye.</p><p>"Lee is credited with being one of the first financiers to purchase companies with money borrowed against the business being bought — what is now called a leveraged buyout."</p>

A year ago I wrote about the sad story of the Simmons Mattress company, a well run outfit that got caught in the cross hairs of the investment bankers, and while they never had a problem making and selling mattresses at a profit they were bought and sold by a series of investment bankers, each one artificially pumping up the book value of the company, borrowing against the inflated value to pay themselves outrageous fees and to repay their investment, and ultimately driving the company into bankruptcy. Factories closed, people were laid off, suppliers short-changed, as the investment bankers took...

The private equity industry has what would seem to be an enviable problem. Despite a recent history of turning solid corporations into debt-laden cripples, leveraged buyout firms are sitting on $445 billion of committed capital. That's how much private equity has raised — but not yet spent — from investors like pension funds and endowments. Sounds like $445 billion is a good problem to have. But it's not that simple.

Excerpt - The two proposed buyers of Clear Channel Communications filed two lawsuits on Wednesday against six banks that agreed to finance the company’s $19.5 billion buyout. Bain Capital and Thomas H. Lee Partners, two private equity firms, sued the bank consortium in New York state court for breach of contract, accusing them of refusing to honor their commitment to finance the deal. Additionally, the two firms and Clear Channel itself sued the banks in Bexar County, Texas, where the broadcaster is based, accusing the banks of interfering with the closing of the takeover. ~ snip ~

Excerpt - In what will be the largest leveraged buyout of all time, the private equity firm of KKR is close to announcing its purchase of TXU, the giant Texas utility that is the largest producer of power in that state, CNBC's David Faber has learned. TXU's board is expected to vote on the deal this weekend and an announcement is likely on Monday morning, people familiar with the situation told Faber. TXU officials and KKR declined comment. The exact price KKR will pay is unclear, Faber said. TXU's current market cap is $27.5 billion. It also has $12.3 billion...

A Credit to the Corporate Raider Stuart K. Hayashi The media's exploitation of the 2001 corporate scandals in its hysterical (and popular) campaign to defame businesspeople in general harkens back to another anti-capitalist witch hunt they conducted in the 1980s. That era is now pejoratively dubbed "the Decade of Greed," as it saw the proliferation of honest but controversial characters known as "corporate raiders." "Corporate raiders" are the mavericks who launch "hostile takeovers," trying to take over failing mega-corporations for themselves. (Successful companies have higher stock prices and are thus harder to buy out.) To do this in the...