Marquee private equity firms such as Blackstone Group, Carlyle Group, and Kohlberg Kravis Roberts, have grown bigger and more powerful than ever. They have also become the nation’s largest employers through the businesses they own. Journalist Josh Kosman explores private equity’s explosive growth and shows how its barons wring profits at the expense of the long-term health of their companies. He argues that excessive debt and mismanagement will likely trigger another economic meltdown by 2016, wiping out more than one million jobs.
He also explores the links between the private equity elite and Washington power players, who have helped them escape government scrutiny. The result is a timely book with an important warning for us all.
The paperback of the Buyout of America, with updates throughout, was published Nov. 30, 2010.
Where to Buy the Book:
New York Times blogger considers us a must book to read in 2010.
The Library Journal includes it on a Best of 2009 Business Books List.
“The Buyout of America”… is less concerned with blow-by-blow deal-making or personal stories than with the real-life economic effects of private-equity deals. Mr. Kosman brings to the subject a relentlessly critical approach that is refreshing, simply because so many stories about the buyout firms are the sort of puff pieces that result from delicate negotiations for access. He documents dozens of companies acquired in buyouts—such as hospitals, mattress manufacturers and a car-parts maker—whose service or products went downhill, whose employees suffered pay cuts or layoffs, and whose fortunes plummeted, sometimes ending in bankruptcy.
Wall Street Journal, Nov. 10, 2009.
With exhaustive research and a rogues’ gallery of interviews, journalist Kosman puts together a convincing and disquieting argument that private equity firms are about to cause the next great credit crisis. Many people don’t realize that “private equity” is just a new name for a leveraged buyout, and that private equity firms make their money by loading their acquired companies with debt, garnering short-term gain at the cost of the businesses’ financial longevity. Exposing the pernicious practices of various high-profile firms (including Mitt Romney’s company, Bain Capital, notorious for its company-destroying practices), Kosman reveals how they cripple their acquired businesses competitively, limit growth and cut jobs without reinvesting the savings, all without even generating good returns for their investors. But if only half of PE-owned businesses go bankrupt, that would leave almost two million Americans out of jobs. What’s to be done? Kosman is a proponent of legislation that encourages buyers of companies to hold on to them for at least five years. This alarming book will keep anxious credit watchers on their toes—and hopefully inspire some pressure to keep PE firms from going the way of mortgage brokers. (Nov.)
Publishers Weekly; 9/7/09
American Prospect Magazine in a June 2010 review calls the book “brilliant and necessary.”
The Daily Kos Feb. 24 had a posting “What is Private Equity?” that was very informative, and does a nice job summarizing the book. The post provides links to many of the larger private equity firms.
Emily’s four-star review on GoodReads 12/22/09
Economic Populist review 1/9/10
Blog Business World review 3/13/10
Planet POV.com review and thoughts on private equity 4/12/10
National Restaurant Franchisee Association recommends book 9/1/10
“Just how do those giant private-equity boys get away with taking over working companies, strip-mining their equity, squeezing out many workers, often ending in bankruptcy, yet still jump ship with big profits, pay very few taxes, and stay out of jail? The answers are in Josh Kosman’s The Buyout of America. He believes there is still time to wake up Washington, but only if enough readers themselves heed this properly alarming wake-up call for all Americans.”
“The decades of financial manipulations that have wreaked havoc on America and cost millions of people their careers are far from over, Josh Kosman shows as he takes readers on an insider’s tour of the secretive world of private equity, where enormous profits accumulate not through smarts and hard work, but through ruining companies and using political influence to shift costs and the risks of failure onto the rest of us.”
—David Cay Johnston , Pulitzer Prize-wining author of Free Lunch and Perfectly Legal
“The Buyout of America is a hard-hitting examination of the private-equity firms whose negative impact on the nation has been woefully neglected by the media. Josh Kosman makes a compelling argument that private equity will be the cause of the next big financial crisis. This book is urgent reading for policy makers.”
—Gary Weiss, author of Wall Street Versus America