Moody's Challenges LBO Firms for Short-Term Focus, Borrowing for Dividends

(Bloomberg) -- Moody's Investors Service challenged
the leveraged buyout industry's claim that private ownership
allows companies to invest in the long term because it cuts them
free from the pressures of quarterly earnings.

Buyout firms' practice of taking out new loans to pay
themselves dividends from the companies they own runs against
their claim they invest in the long term, the ratings company
said in a report today. Moody's also said there isn't enough
evidence to show buyout firms make gains because they install
better managers at the companies they buy, rather than because
they use debt to inflate returns.


Read more at Bloomberg Bonds News