Private Equity Explained, Sans Politics

NPR’s Planet Money show has done a nice, typically even-handed and layman-friendly episode on the investing activity of Bain Capital.

Of course, that topic is in the news a lot because of the presidential candidacy of ex-Bain partner Mitt Romney, who’s alternately villainized as a corporate vulture or lionized as a job creator based on his record at Bain.

As always, Planet Money gives a very straight-ahead, accessible treatment to this topic — something that’s really difficult to find elsewhere, I think. They explain both the good aspects of private equity (taking big risks to revive companies that are already struggling) and the sketchier parts (piling secondary rounds of debt on a company’s balance sheet just for the sake of paying off investors, even before operations have started to throw off any additional profits).

Frankly, Planet Money doesn’t cover a lot of truly new ground for me as someone who’s an ex-business journalist myself. Mostly, I just appreciate how difficult the task of explaining these topics to a mass audience is, and I admire their aplomb at it.

This episode is good stuff not only for voters but also my fellow entrepreneurs. Frankly, I meet a lot of founders with great ideas and backgrounds in engineering, education, and other fields who could stand to brush up on how companies like Bain work as they raise money. Venture capitalist Fred Wilson’s blog is also great for that specific purpose.