And that’s when the fun starts. Once the buyout is completed, the private equity guys start swinging the meat axe, aggressively cutting costs wherever they can - so that the company can start paying off its new debt - by laying off workers and cutting capital costs. This process often boosts operating profit without a significant hit to the business, but only in the short term; in the long run, the austerity approach makes it difficult for companies to stay competitive, not least because money that would otherwise have been invested in expansion or product development - which might increase revenue down the line - is used to pay off the company’s debt.

Kosman wrote The Buyout of America: How Private Equity Is Destroying Jobs and Killing The American Economy’, which has a killer chapter on Bain Capital. Go read it.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.