Monday, January 16, 2012

The Venture Capital takeover myth!

Several Republican candidates and a host of the media obviously DO NOT understand what investment, or capital firms, do and how they interact with companies they are involved with.

I have run my own business for 30 + years, from time to time I have gone to the "capital markets" to seek capital for my business.   Businesses seek capital from outside investors for several reasons.  Some business owners seek capital to expand their business, some seek capital for a buyout of the founders, some seek capital because their business is in trouble and on the verge of collapse.  I can tell you from experience that the first two reasons are much easier to accomplish, the third is a much more difficult task.

But regardless of why a business seeks capital, the simple fact is that just because a business talks to a capital firm or potential partner does not mean the business has to accept the terms proposed by the firm to provide capital to the business.  So when you hear some say that Bain Capital or XYZ Capital "took over this or that business" the folks who are saying those things are simply demonstrating their complete lack of experience and knowledge about how the capitalist system actually works.  Under a free and open society no capital company can take over any private company without the consent of the ownership of that company, its creditors, and investors.  So you can be assured that any company that Bain Capital or any other Capital provider invested in did so with the full consent of the owners.  The owners always have the option of not accepting capital from outsiders, which by the way always comes with terms and conditions that favor the folks proposing to provide the requested capital.  And frankly many business owners do turn down outside capital when the terms are not to their liking, and sometimes businesses fail!

The only organization that I am aware of, that has actually taken over privately owned (through the public stock market) companies, is the US Government under the leadership of Obama and the Democrats as they did with the U. S. auto industry in 2009!  Socialism allows governments to do that!  Capitalism does not!

Choose wisely when you vote in November of this year!

Willie P

A common sense thinking country boy from fly over country!

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