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Ready To Go Private? It Ain't All Roses


The "glamour" of private equity ("Going Private," Cover Story, Feb. 27)? Not quite. EBITDA (earnings before interest, taxes, depreciation, and amortization) reigns, and we drive to Staples (SPLS) to buy binders for bank meetings rather than summon the company jet. "Less focus on quarterly results"? Uh, no. We're typically highly leveraged, we lose sleep over loan covenants, and the best way to make a year is still to make each quarter.

But "nimbleness"? And how! The right board, with the CEO and one or two other people, can indeed turn a piece of competitive intelligence into a competitive advantage within an hour. Now that's creating shareholder value.

Michael K. Lorelli

President and CEO

Latex International

Shelton, Conn.

Those "public company" costs, such as Sarbanes-Oxley and investor relations, that are eliminated in a leveraged buyout are frequently replaced with substantial "private company" costs, such as management fees and financing fees imposed by private equity sponsors as they attempt to increase their returns. These costs tend to come back quickly as sponsors work to achieve their "exit strategy" by returning the company to public markets through an initial public offering or sale to a publicly traded company.

William K. Hall

University of Michigan

Ann Arbor, Mich.

Seven full pages were devoted to "Campus revolutionary" (Special Report, Feb. 27), profiling Amherst College President Anthony W. Marx and his ambitious plan for the "redistribution of educational opportunity." And not one word on the much bigger problem, in terms of numbers, facing middle-class kids -- proven strivers and achievers -- who cannot afford elite education.

Redoubling efforts to find more deserving poor and minority students is noble and commendable. But raising hundreds of millions of additional dollars to supplement faculty, build infrastructure, install remedial courses and tutoring programs, and otherwise dumb down the institution is a foolish and unwieldy waste of resources. If folks like Marx devoted half as much energy to our abysmal K-12 public school system, we wouldn't need this discussion.

James M. Droney Jr.

Pittsburgh

To highlight Amherst when thousands of community colleges have been doing the same thing for decades with no mention, no fanfare, no cover stories, fewer resources, and, in most cases, less public funding, illustrates BusinessWeek's (MHP) myopic vision of the true state of higher education and misses a much larger and more significant portion of how human capital is really developed in the U.S.

Ryan Smith

Channahon, Ill.

I entered Amherst in the fall of 1970 as a transfer student from a junior college in riot-torn Newark, N.J. While my two years at Amherst were very challenging, I survived and prospered -- graduating with a solid B average. I recently began to repay Amherst for my academic scholarship. Next month will mark my final payment -- not bad for a low-income kid from the other side of the tracks.

John H. Nesbitt

Director, University Recruiting

& Employment Marketing

Monsanto

St. Louis

William Symond's superb, in-depth report on Tony Marx's plans for a half- billion-dollar capital campaign to fund massive social change on the Amherst campus is better reporting on Amherst than the college has offered its alumni for decades.

In response to my inquiry about why all this information was in BusinessWeek and not in any communications with alumni, an Amherst official wrote: "Rest assured that no timetable has been set for a campaign, and certainly no dollar goal has been determined. You know how the media work; I'm afraid BusinessWeek jumped the gun on that part of the story."

I'll believe BusinessWeek ahead of official pronouncements any day of the week.

Dick Hubert

Rye Brook, N.Y.

As a partner in a failed specialty hospital, Heart Hospital of Milwaukee, I can offer a unique viewpoint on "Should doctors own hospitals?" (Science & Technology, Feb. 20). Since my investment has already been lost, I have nothing to gain. Our hospital was one of the heart hospitals built in partnership with MedCath Corp. (MDTH). Quality of cardiovascular care went up in every community in which MedCath built a heart hospital. The mortality rate for open-heart surgery in one community went from 10% to 4% in two years. The other open-heart programs in that city also got better because of the new player in town. Even if it works out in the long run that it costs the same as the current system, isn't it worth it to challenge these big, old systems that are operating the same today as they did 75 or 100 years ago?

Dr. Bruce C. Wilson, President

Wilson Heart Care Associates

Mequon, Wis.

"This is the face of broadband TV" (Information Technology, Feb. 13) focused on the importance of understanding consumer behavior and marketing strategy. But PCCW Ltd.'s NOW Broadband succeeds because of its world-class technology platform. Programmers are attracted to our highly effective security protocol that stops piracy. NOW Broadband is a team effort that would have been impossible without the range of talents and disciplines we have in the group.

Janice Lee

NOW Broadband

Hong Kong


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