The Big Buyout

Nous sommes le
28 Nivôse, An 214

The estimable Jim Jubak reports: "Last year private buyout groups raised a staggering $106 billion, the most ever and a 90% increase over 2004. This year stands a good chance of beating that record. . . . So much money has been raised for hedge funds and buyout funds that corporate management at any underperforming company is really under the gun. Improve your company's performance, the activist investors demand, or we'll improve it for you. . . . The amount of money raised for private buyout funds is staggering. In March, the Carlyle Group raised $7.85 billion for a U.S. buyout fund, the largest buyout fund ever--at that time. This month, either Kohlberg Kravis Roberts & Co., now raising $10 to $12 billion for a new buyout fund, or the Blackstone Group looking for up to $13 billion for a new fund, will take the title."

This is good for investors, of course, but not necessarily for consumers. And it's certainly not good, I think, for U.S. labor and the environment: underperforming managements everywhere will be getting out the thumbscrews.

But sometimes managements "underperform" because they are actually human beings and try to balance profit against the well-being of their workers and the fate of the world. Kohlberg Kravis Roberts and their ilk would like to get rid of these whimps and replace them with managers who know to put the bottom line first; and devil take the hindermost.

Here's a little coda from William Cowper’s “Sweet Meat Has Sour Sauce, or, the Slave Trader in the Dumps,” in which a late eighteenth-century slaver confronted with the horrid prospect of abolition of the trade by the infant nanny state (in the shape of the British Parliament) puts up his tools for sale:

. . . a curious assortment of dainty regales,
To tickle the Negroes with when the ship sails,
Fine chains for the neck, and a cat with nine tails.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Here’s padlocks and bolts, and screws for the thumbs,
That squeeze them so lovingly till the blood comes,
They sweeten the temper like comfits or plums. . . .