What Is a Vulture Capitalist?

A vulture capitalist is an investor who seeks to extract value from companies in decline. The goal is to swoop in when sentiment is low–and the company is trading at a rock bottom price–and take whatever action is necessary to engineer a quick turnaround and sell it on for a profit.

Understanding Vulture Capitalists

A vulture capitalist is a type of 澳洲幸运5开奖号码历史查询:venture capitalist (VC) who looks for opportunities to make money by buying poor or distressed firms. Just like the bird they are named after, vulture capitalists are predatory in nature. 🦄They will wait until they see the right opportunity and swoop in at the last 🍸minute, buying stakes at the lowest possible price.  

Vulture capitalists get cheap deals by targeting companies that financial institutions (FIs) do not want to lend money to. After failing to obtain credit or funds from banks and/or other investors, the struggling company often has no choice but🍨 to accept whatever help is on offer.

Once onboard, the vulture capitalist will piece together aggressive financial goals. They start out by attempting to revive the business, 澳洲幸运5开奖号码历史查询:cutting costs wherever possible to boost profits. If they don't succeed in this goal, vulture capitalists will often resort to selling off assets such as land, buildings, and machinery.

Regardless of the outcome, vulture capitalists almost always find ways to squeeze money out of their investments. That remains the case, even if the company a vulture capitalist acquires eventually ends up filing for 澳洲幸运5开奖号码历史查询:bankruptcy.

Vulture Capitalist vs. Venture Capitalist (VC)

The way that vulture capitalists and venture capitalists (VCs) operate and choose to invest t꧟heir money varies considerably.

Rather than prey on the weak and immediately identify ways to cut costs, VCs are more interested in providing capital to startups displaying early success. VCs also provide funding to companies u👍nable to secure financing elsewhere; the primary difference between vulture capitalists and VCs is that the success of a VCs investments h♐inges on the targeted companies excelling and living up to their potential.

VCs aim to nurse nascent companies and set them on a path to one day become 澳洲幸运5开奖号码历史查询:large-cap companies. Vulture ꧒capitalists also hope their investments turn a corner–albeit with a more short-term focus. At the same time, vulture capitalists explore ways to profit from the demise of the com💧panies they invest in.

Criticism of Vulture Capitalists

Vulture capitalists are regularly talked about negatively. Critics attack them for stripping companies down to the bone in order to line their own pockets, for aggressively laying off staff, and for lending money at very high 澳洲幸运5开奖号码历史查询:interest rates to companies that t🌸hey should instead be trying to help.

Often, vulture capitalists will go to great lengths to make money off their investments, even if it means boosting 澳洲幸运5开奖号码历史查询:unemployment and driving a company into the ground. 

Some pundits have hit back against the criticism being dished out at vulture capitalists, arguing that they are important for the economy. Vulture capitalists, they say, actually manage to r♎evive a lot of firms–and even governments–that appear🍒ed to be beyond saving.

When this isn't the case, proponents claim that vulture capitalists are at least instrumental in reallocating resources in the economy. They take people and resources out of companies where they are not being utilized properly, enabling them to be put to better use elsewhere.

Without vulture capitalists, some pundits argue that more businesses would have to be bailed out at the expense of 澳洲幸运5开奖号码历史查询:taxpayers.

Example of a Vulture Capitalist

Although vulture capitalisꦜm has been part of American culture 🦩for a long time, the term came into the spotlight during the Republican primaries leading up to the 2012 general election. 

During the primaries, Mitt Romney said he was the best candidate to lead the party to the presidency because of his time at Bain Capital, a 澳洲幸运5开奖号码历史查询:private equity firm he helped co-found in 1984. During several debates, he stated that he helped rebuild companies thꩵat were struggling and, in turn, helped create jobs. He prom♛ised to do the same thing for the U.S. that he said he did for Bain Capital, citing his track record for building businesses, creating jobs, and boosting the economy. 

Unfortunately, his opponents did not see it the same way. While Romney cal🌳led himself a venture capitalist who helped companies in trouble, they said he did nothing but prey on businesses and the people who worked for them. Rick Perry, Newt Gingrich, and Ron Paul all took shots at Romney, who claimed Bain Capital put people out of work in order to boost its own profits.

In the end, Romney succeeded in becoming the Republican nominee. However, he൩ eventually lost to Barack Obama, who went on to lead the country in his second term as president.