Monday, January 2, 2012

Vulture Capitalism

All right, here is a free catch phrase for my left wing friends: Vulture Capitalism

Venture capitalism is a process where investors pool their money and buy into smaller companies. Buy investing in a small company the investors are taking a larger risk than by investing in the larger market, thus venture, as in "nothing ventured nothing gained".

On average, over many such investments, the venture capitalist should expect to do better than the market as a whole, otherwise why take the risk?

What Mitt Romney and the Bain Group did in many cases was the traditional definition of venture capitol, though in many cases the companies invested in were fairly large, not the traditional start-up.

What they also did, quite a bit actually, was to buy up companies, and then dismember them for the assets. That is, they bought them not because they thought they could make money through the business, but they could make a profit by parting out the company, getting rid of the employees, selling off the land, buildings, fixtures and anything of value.

I call this dismembering of the carcass Vulture Capitalism. Even if it is necessary for the smooth running of a capitolist economy, it's the rather unseemly destruction of Jobs that leaves a rather bad taste for most Americans. Americans understand that businesses go under, and that businesses fail, they don't really understand or like it when businesses are closed on purpose in order to make money for outside investors.

So there you go my liberal friends: Mitt Romney, Vulture Capitalist.

1 comment:

Anonymous said...


That is an interesting take on "Vulture Capitalism" but what happens to the company if companies like Bain didn't invest in them?

These companies are sick and on the way to bankruptcy already right? Wouldn't everyone lose their jobs and all assets be liquidated in that event anyway?

In many cases didn't Bain actually come in and find ways to save money (yes sometimes this means eliminating employees) and in turn save the company?

A healthy, viable company is worth way more than a bloated one on it's death bed. Sure, some people might lose their jobs but isn't that better than everyone getting canned?

I am not a huge Romney fan but I see the US government as a huge fat entity on it's deathbed just like one of these "vultured" companies. Unless someone comes in and makes some serious decisions we only have to look at Greece to see our future.