Friday, January 27, 2012

Dade International Deal: dirty dirty dirty

The description of the Dade International deal in the "The Real Romney" didn't make any sense, so I found another description in the business press:

The account still isn't clear, but it does clear up some points.  First of all, Bain contributed $27 million to a $442 million Goldman Sachs set up of Dade International.  Then the new company went on an acquisition binge, paid for with new debt.  Bain took almost $100 million in "management fees," including Mitt Romney himself, who fined people who were late for meetings and otherwise micromanaged.  After an acquisition and a merger, Bain wanted the company sold, presumably to a competitor.  But some shareholders wouldn't bite, so Bain had Dade borrow the money to buy back Bain's shares to the tune of $240 million. Other shareholders and Dade's management also took millions. The company then declared bankruptcy because it had taken on too much debt.  Romney was accused of "unjust enrichment" by the creditors because essentially the money went from the lenders' pockets into his.

After it emerged from bankruptcy, the company went public and was eventually sold for $7 billion to  Siemens, but in truth the company was only in 2007 reaching the sales it had as three separate companies before Romney merged them.

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