Comments on: Quote of the day: Gordon Gekko – greed is good http://www.creditwritedowns.com/2008/09/quote-of-day-gordon-gekko-greed-is-good.html Finance, Economics and Markets Fri, 10 Feb 2012 00:37:00 +0000 hourly 1 By: Edward Harrison http://www.creditwritedowns.com/2008/09/quote-of-day-gordon-gekko-greed-is-good.html#comment-315 Edward Harrison Mon, 22 Sep 2008 14:37:00 +0000 http://www.creditwritedowns.com/2008/09/quote-of-the-day-gordon-gekko-greed-is-good.html#comment-315 I don't know if I would make the sweeping statement that private equity is a sham. n would say that it experienced a massive bubble because interest rates were so low.<br/><br/>And I think as you probably do that we are going to see some seriously large leveraged buyout busts.<br/><br/>The days of Gordon Gekko are well and truly over. I don’t know if I would make the sweeping statement that private equity is a sham. n would say that it experienced a massive bubble because interest rates were so low.

And I think as you probably do that we are going to see some seriously large leveraged buyout busts.

The days of Gordon Gekko are well and truly over.

]]> By: MAB http://www.creditwritedowns.com/2008/09/quote-of-day-gordon-gekko-greed-is-good.html#comment-282 MAB Mon, 15 Sep 2008 04:35:00 +0000 http://www.creditwritedowns.com/2008/09/quote-of-the-day-gordon-gekko-greed-is-good.html#comment-282 Ed,<br/><br/><i>In the last seven deals that I've been involved with, there were 2.5 million stockholders who have made a pretax profit of 12 billion dollars</i><br/><br/>WOW! That sounds great, but let's take a closer look. <br/><br/>According to my math, that's $686 per shareholder per deal. Woohoo! <br/><br/>After tax, it's likely around $400 per sharholder per deal. And after the euphoria subsides, it's likely $300 per shareholder per deal. And after inflation, it's likely $350 per share holder per deal. And after the business cycle turns, it's likely $0 per shareholder per deal. <br/><br/>Private equity (formerly known as leveraged buyouts) is generally a sham. It only works while interest rates are falling. Even then, little if any ecomomic benefit is realized by society. Ed,

In the last seven deals that I’ve been involved with, there were 2.5 million stockholders who have made a pretax profit of 12 billion dollars

WOW! That sounds great, but let’s take a closer look.

According to my math, that’s $686 per shareholder per deal. Woohoo!

After tax, it’s likely around $400 per sharholder per deal. And after the euphoria subsides, it’s likely $300 per shareholder per deal. And after inflation, it’s likely $350 per share holder per deal. And after the business cycle turns, it’s likely $0 per shareholder per deal.

Private equity (formerly known as leveraged buyouts) is generally a sham. It only works while interest rates are falling. Even then, little if any ecomomic benefit is realized by society.

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