Those conducting the buyout get very rich. The banks that arrange the loans get monster fees.

The company itself and the employees get screwed. Bankruptcy and disappeared pensions are the usual result.

Except for the LBO artists, who get very rich. Did I mention that?

The fact that that this company was a LBO does not surprise me. LBOs often have issues with too much debt

if the capital extraction were done through any means other than interest payments on the borrowed funds, people would see it for the scam that it is.

instead, people dismiss it as business as usual, hey, ya gotta pay your debts.

but it's one thing when you go bankrupt because you couldn't pay back funds used to operate or expand a company; it's another thing when you go bankrupt because you couldn't pay back funds used to take the company private.


in any event, in order to succeed as an lbo you have to grow very quickly and luckily, enough to pay back the incredible interest and debt. if you're then in the clear, you win big time.

otherwise, there are a lot of losers.

the vc firms that create such deals may or may not be ahead on any particular deal; it depends on how much interest they were able to extract before it all falls apart. but they do enough of these deals so that on average, they're richly rewarded for this nonsense.