Editor, Times-Union:
Zimmers-Biomet good deal or not? Certainly it’s a great deal for the usual suspects well known in the shady side of economics.
Let’s see, there is a Blackstone group that is buying up massive amounts of rental property coast to coast. As the housing bubble expands Blackstone will catch you on the way down when buying a house becomes unaffordable.
Then there is the unindicted criminals at Goldman Sachs. So far it has a familiar smell to it.
It’s a great deal for the predators. For them it will be the gift that keeps on giving. That’s because, beyond the profits they share with their clients, they will be paid millions more in fees – for work they are never going to do.
In addition to the 20 percent share of gains from the sale, as well as management fees of 1.5 percent to 2 percent charged to investors. The private equity firms will share $30 million in “monitoring fees.” These fees were to be charged through 2017, but given the deal is expected to close early next year, Blackstone, Goldman Sachs, KKR and TPG will be paid for two-years services that Biomet isn’t receiving.
Private equity is huge. It is now a $3.5 trillion corner of a 64 trillion asset management industry. There are 2,700 of these firms nationwide that use borrowed money to acquire companies they hope to sell later at a big profit. Once called leverage buyout firms, private equities have changed American business in the 21st century. By buying companies, getting them into “shape” and selling them or taking them public.
Read between the lines, Warsaw workers. Next stop will be moving these companies offshore down the road a bit unless workers agree to even more third-world style wage cuts.
Tom Metzger
Warsaw, via email