Private Investor Venture Capitalist
Reader comment on: Macey Versus Lenzner
Submitted by Dan Calabria (United States), Jan 13, 2012 20:18
This business is really quite simple. Raise money and, based on research and analysis, an outside group or company makes a decision to "acquire" or invest in a company that is somehow distressed. Once that is accomplished, all entirely legal, decisions are made to reduce expenses and bring in new management to make the necessary changes to "reinvent" the company to one that is better positioned to compete in the economy based on the changes implemented.
Did this cost too much? Were jobs eliminated? Possibly and likely, but a newly oriented company exists to compete in the business place. The venture is not always successful or viable. If it's not successful then it simply will disappear and the "new" investors will take the loss. If it is viable and begins to earn money then those who invested the time and money to make that happen are entitled to a reward (profit) for the efforts they made.
Are they rewarded excessively? Who is to say? That answer is based on hindsight - there are no guarantees. But one thing's for sure, no one is out there advertising all the venture takeovers that subsequently failed. However, no one really knows if and how many net new jobs were created in either case. Nevertheless those who invested the money get first "dibs" on the rewards, if any.
Concerning those who might brag about their achievements in such ventures they need to be extremely careful of what they claim was accomplished and whether or not it was "successful."
And that's where issues arise and are subject to challenge and debate...rightly so
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