Is anyone questioning these takeovers

Discussion in 'Wall St. News' started by S2007S, Nov 6, 2006.

  1. S2007S


    didn't occur to me until I read an article this past weekend on all these private firms buying out these publicly traded companies.

    This is written by Robert Kiyosaki

    Flipping the Economy

    Most of us know that a real estate flipper is someone who buys a house, may or may not fix it up, and then puts back on the market at a higher price. Well, in this environment of easy money to businesses, many private lenders are buying up public companies' stock in order to take them private.

    This has pushed the prices on the stock market to new highs. The acquiring company may then flip the companies by selling parts of them or by taking them public again, not unlike a real estate flipper. This is happening worldwide.

    For instance, a friend of mine just pocketed $24 million for his company. A private equity firm couldn't wait to give him the money. Another friend spends his days calling little mom-and-pop operators who specialize in teaching children with learning disabilities, offering them several million dollars for their business (which many of them take), and pocketing a 20 percent finders commission.

    The End Is Near

    Maybe I'm too old or not hip enough, but when I look at these businesses and the prices they're commanding, I really don't know how it all makes sense.

    The problem I see is that the businesses aren't being acquired with money or equity -- they're being acquired with debt. And as far as I know, somebody will have to pay that money back someday.

    The Spanish Empire eventually collapsed because of its expensive taste for warfare and conquest. I'm concerned that the modern world will itself be conquered because it's developed an expensive taste for debt. So what do I recommend? For now, enjoy the party, don't drink too much, and stay close to the exits.
  2. This was big in the 1980's too..Remember Richard Gere's character in Pretty Woman and Barbarians at The Gate..
  3. S2007S


    Today I think there were about 3-4 companies taken private.