Private equity is buying everything from vet offices to tech conglomerates

> Romney and Bain avoided the hostile approach, preferring to secure the cooperation of their takeover targets by buying off a company’s management with lucrative bonuses. Once management is on board, the rest is just math. So if the target company is worth $500 million, Bain might put down $20 million of its own cash, then borrow $350 million from an investment bank to take over a controlling stake.

> But here’s the catch. When Bain borrows all of that money from the bank, it’s the target company that ends up on the hook for all of the debt.

> This business model wasn’t really “helping,” of course – and it wasn’t new. Fans of mob movies will recognize what’s known as the “bust-out,” in which a gangster takes over a restaurant or sporting goods store and then monetizes his investment by running up giant debts on the company’s credit line. (Think Paulie buying all those cases of Cutty Sark in Goodfellas.) When the note comes due, the mobster simply torches the restaurant and collects the insurance money. Reduced to their most basic level, the leveraged buyouts engineered by Romney followed exactly the same business model. “It’s the bust-out,” one Wall Street trader says with a laugh. “That’s all it is.”

No one at the call center is enjoying the satisfaction of a job well done, it is complete detached. I'm sure the laborers are pushed hard to high quotas and have zero time to follow up with customers.

I think we need to back to owning the entire system if we are going to have better services, better profits and satisfied employees.

Fucker made squillions off the backs of misery for hundreds of thousands of people.

You take out a mortgage for a property you intend to cashflow by posting it on AirBnB. You open an LLC to do so. You put down a fraction of the price of the home, let's say 5-10% and then you do some upgrades, but you borrow against the price of the home for the upgrades, not against your own credit. Now, you start AirBnBing this very nice house out for absolute top dollar. It's nice and people love it, you have great reviews. Every time you get a payment from AirBnB, you take most of the money and move it to your personal bank account as a "management fee" or a "bonus" and you put the smallest amount possible into the mortgage and the second mortgage (the one you used to upgrade the house). Now, as the house gets more use, or you cut costs, say on having the pool cleaned, or on yard maintenance, the house goes down in quality pretty significantly, but your original AirBnB ratings are there and people are willing to pay significant sums so you continue to rake in cash, and you try to avoid maintenance as much as possible.

Eventually, the place is a run down heap, and people are leaving terrible reviews, so you stop having bookings/cashflow. Okay, now you just send the keys to the bank and say "it's your problem". They get a rundown house that has barely repaid its mortgage, and you get to keep the cash. The trick is to have moved a lot more cash into your account than you lose in the mortgage down payment.

Edit: I should add that PE firms aren't always trying to extract value at the cost of the business (sometimes they absolutely are). However, they are always incentivized to make cash flow and take maximum business risk for potentially even larger payout.