Carlyle Group

[Peter Lemkin]

Connections And Then Some
2003-03-14, Washington Post [Yes, I too am wondering why the WP would expose this...caveat emptor!]
http://www.washingtonpost.com/ac2/wp-dyn...tentId=A25...

The Carlyle Group [is] an investment house famous as one of the most well-connected companies anywhere. Former president George H.W. Bush is a Carlyle adviser. Former British prime minister John Major heads its European arm. Former secretary of state James Baker is senior counselor, former White House budget chief Richard Darman is a partner, former SEC chairman Arthur Levitt is senior adviser -- the list goes on. Those associations have brought Carlyle enormous success. The Washington-based merchant bank controls nearly $14 billion in investments, making it the largest private equity manager in the world. It buys and sells whole companies the way some firms trade shares of stock. But the connections also have cost Carlyle. It has developed a reputation as the CIA of the business world -- omnipresent, powerful, a little sinister. Media outlets from the Village Voice to BusinessWeek have depicted Carlyle as manipulating the levers of government from shadowy back rooms. Congresswoman Cynthia McKinney (D-Ga.) even suggested that Carlyle's and Bush's ties to the Middle East made them somehow complicitous in the Sept. 11 terror attacks. It didn't help that as the World Trade Center burned on Sept. 11, 2001, the news interrupted a Carlyle business conference at the Ritz-Carlton Hotel here attended by a brother of Osama bin Laden. Former president Bush, a fellow investor, had been with him at the conference the previous day. Bush['s] primary function is to give speeches for Carlyle that attract wealthy foreigners in places where the former president is especially revered, such as Asia. The company has rewarded its faithful with a 36 percent average annual rate of return.

Note: If the above link fails, click here. To understand the amazingly powerful role of this low-profile, yet extremely wealthy and influential group, [url=http://www.wanttoknow.info/powercorrupts][/url] shown on Dutch national TV which clearly depicts the depths of corruption and deceit at the highest levels of government.

[Magda Hassan]

Bill Conway arrived with curiosity at the downtown Washington Marriott for a breakfast interview one morning 24 years ago. Young and ambitious, he had run his string out as chief financial officer at MCI, the fiery telecom upstart. He was ready for something new.
The three 30ish hosts two high-powered attorneys and a fast-climbing Marriott executive needed someone with investment chops to help launch their firm. Conway wasn't their first choice, but he would do.






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Carlyle takes on the world



"It was a chance," says Conway, 61, now a billionaire looking back on a day that transformed his life. "There was nothing sure about it."
And so The Carlyle Group was born.
After meandering for a couple of years, they hit upon a game plan to build a showcase of Washington insiders who could find deals and draw investors. Former presidents and Cabinet secretaries signed up. Fat profits and growth followed. Pension funds and the governments of countries got in line to give Carlyle money.
Forged not on Wall Street but on Pennsylvania Avenue, Carlyle has grown into a financial powerhouse. It manages more than $100 billion that is invested in 270 companies and properties around the world with names like Hertz and Dunkin' Donuts. Its companies have more than 500,000 employees, or five times those of ExxonMobil.
The rise of Carlyle embodies the evolution of American private equity, climbing from its niche as a boutique buyout firm to the height of global finance. Like the mutual funds industry before it, Carlyle helped revolutionize the financial sector by creating a new investment class and then mass-producing it.
Now the intensely private firm is about to make its biggest deal yet: an initial public stock offering. About 10 days ago, Carlyle began contacting banks including Goldman Sachs, J.P. Morgan Chase, Credit Suisse and UBS, an effort led by managing director and partner Glenn Youngkin. It is likely to choose underwriters by the end of June. An inside team is working on the paperwork, but the timing of the IPO will depend on market conditions. The company is believed to be worth at least $10 billion.
Overnight, Carlyle's 99 partners will become millionaires and billionaires, with stakes valued from $3 million to $2 billion. The firm's innermost financial workings will be laid bare. The general public will be able to buy a piece and share in its profits.
Carlyle makes money three ways: First, it collects 2 percent of what it manages; second, private equity firms keep 20 percent of the profit they earn for investors; third, Carlyle invests alongside its investors in Carlyle funds.
The stock sale may propel Washington's growing reputation as a finance hub. It's three founders, David M. Rubenstein, Conway and Daniel D'Aniello (known as DBD), hope to eventually cash out and leave the firm with a battle-tested cadre of new leaders.
When Carlyle goes public, the upper management will be reorganized. D'Aniello will be chairman of Carlyle Group, while Rubenstein and Conway will be co-chief executives.



"They had a vision, a plan," said Fred Malek, who worked as a senior adviser to Carlyle in the early 1990s. "And they kept true to their vision and grew the firm based on the principle of if you do well for your investors, you will do well."
A python'




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Carlyle takes on the world



David Rubenstein sits at a conference table in a slightly disheveled office more fit for an Oxford don than a Master of the Universe. On the wall are reproductions of the Magna Carta and of an early map of the United States. Tucked alongside a credenza is a shipping tube that reads "Declaration of Independence." It, too, is a reproduction.
The office's chaos befits a man who travels the globe 265 days a year, flying to see Middle East potentates, wealthy South American families and European pension chiefs, all in the search for cash to feed the Carlyle deal machine.
Rubenstein, 61, dreamed up Carlyle. His relentless attention to fundraising (he once flew to Paraguay for $5 million) is part of Carlyle lore. With tortoise-shell glasses and a blue suit (coat on), he represents the buttoned-down face that Carlyle turns to the world outside only slightly humanized by the raspberry Snapple he swigs.
"As shy as David may seem socially," D'Aniello said, "he's a python in business."
Rubenstein's distracted handshake reflects a mind off to the next subject. He has an organized, encyclopedic brain, which is currently recalling a moment 20 years ago that launched Carlyle from a breakfast conversation into a titan of finance.
Carlyle's origins are as understated as the discreet New York hotel for which it is named. Pittsburgh's Mellon family, who put up much of the original $5 million in seed money, preferred to meet with Rubenstein's team at Madison Avenue's fashionable Carlyle Hotel. The name stuck.
"Private-equity firms were always mom-and-pop operations," Rubenstein said. Carlyle's future was so tentative that its first lease didn't contain a clause allowing expansion.
Back then, private-equity shops were small, family-run businesses that worked at a deliberate pace. They wrote contracts that stipulated they would manage one fund at a time, a five-to-seven-year process during which the firm focused on a single investment strategy: Raise money. Invest it in a company. Sell the company at a profit.
Former defense secretary Frank Carlucci delivered the first defining deal in 1990. Carlyle invested $43.4 million of its own money in BDM, a defense think tank, and sold it for $454 million three years later 10 times the investment.
Carlyle repeated the play over the next few years, with Vought Aircraft, Magnavox and Federal Data. Conway's investment prowess quietly drew attention in the world of private equity.
"We said, Okay, we're pretty good at this,' " Rubenstein said.
Around that time, Rubenstein had an idea. The firm had raised a $1.3 billion fund and an outsider suggested another fund in venture capital.
"A light bulb went off in my head," Rubenstein recalled. "I said maybe we can have a venture fund. We can have two funds. Let's get a real estate fund. And so we basically created the idea of having a series of funds. That had never been done in private equity before."



Scaling the business
Carlyle has grown into a family of 84 funds around the world, employing a model similar to the one Vanguard and Fidelity brought to the mutual fund industry. "We absolutely scaled it," Rubenstein said.





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Carlyle takes on the world



Carlyle owns Asian forests, a Brazilian lingerie firm called Scalina, Nielsen Co., a truck transmission manufacturer and a group of rest stops along Connecticut highways.
Carlyle became a one-stop shop for pensions, foundations and wealthy individuals. It serves 1,350 investors across 75 countries.
Rubenstein's vision charted Carlyle's vast expansion. The strategy created tension with Conway, the firm's chief investment officer, who worried that growth, which relied on low borrowing costs, could compromise its ability to generate returns. D'Aniello, who ran the show day to day, often mediated.
"We're like an equilateral triangle with David at the tip and Bill and me at the base," said D'Aniello, who leads the firm's energy and real estate deals. "Sometimes David's visionary ideas push it into an isosceles triangle with him way out front. Then we'll say whoa!' But these were the times we all came together."
Steve Norris, another of the founders, left after a few years because of disagreements over strategy.
"David was the guy coming up with the ideas, and I needed to be sold on them," Conway said. "Are we going to be able to invest this money in Asia? How are we going to build a team 8,000 miles away from Washington that can work with us?"
Dan Akerson, chief executive at General Motors who is Conway's closest friend and a former Carlyle colleague, calls Rubenstein "the explorer, always pushing the limits."
"Sometimes, he doesn't know when he is over the edge," said Akerson, who said the two co-founders are "like an old married couple."
"At times, I'm sure they wish the other one wasn't there," Akerson said as he recounted one particularly tense exchange, after which Rubenstein asked: "Why is Bill mad at me? I've done worse things than that to him."
A key regret
Rubenstein prevailed. By 2001, the firm had set its ambitions beyond the defense and aerospace sectors into telecommunications, real estate and other industries.
Carlyle and a partner bought Dex Media, the phone directory business of Qwest Communications, for a whopping $7.4 billion, then the third-largest buyout in history. Within four years they turned their $808 million in equity into $2.1 billion, a 260 percent return.
It got a boost in 2001 when the California Public Employees' Retirement System (Calpers) bought a 5.5 percent stake in Carlyle for $175 million, which is now worth several times that.
There is one big idea that Rubenstein regrets. To boost Carlyle's profile and help draw investors, he hired big-name political insiders such as former President George H.W. Bush, former British prime minister John Major and former secretary of state James A. Baker III.
"We had an image issue . . . due to my fault, principally," he said. "I recruited all the those guys. I wanted to have those ex-government people. I thought these guys can open doors. Nobody ever heard of Rubenstein. Nobody ever heard of Conway."


But Carlyle's proximity to the Bushes, its Saudi investors and its defense deals stoked conspiracy theorists. After the Sept. 11, 2001, terrorist attacks, Carlyle returned money that members of the bin Laden family had invested with the firm, a connection that years later would fuel an unflattering portrayal in Michael Moore's blockbuster documentary film "Fahrenheit 9/11."
The founders had had enough. Carlyle hired its first public relations person, former SEC spokesman Christopher Ullman, and gave him one mission: Reverse the public perception.

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Carlyle takes on the world



Over the next several years, the firm filled its ranks with august business types like former Wall Street Journal editor Norman Pearlstein, General Electric's David Calhoun, former SEC chairman Arthur Levitt and former IBM chief Louis V. Gerstner Jr., who would become Carlyle's chairman.
"By sharing information, meeting with the media, answering the critics and explaining our business, we've changed our brand," Ullman said. "We're bringing glasnost to Carlyle."
Between 2006 and 2008 the heyday of private equity the company made ever-larger acquisitions, including teaming with other firms, paying $17.6 billion for Freescale Semiconductor, which recently went public to disappointing results; Home Depot's supply division for $8.5 billion; Booz Allen Hamilton's U.S. government business for $2.54 billion; and on Christmas Eve 2007 it closed a $6.3 billion deal to buy Maryland-based Manor Care, a national nursing home chain.
By 2008, Carlyle had grown beyond what even its founders had imagined. It controlled $82.7 billion from clients in 68 countries and had posted its two best years, returning $10.2 billion to investors in 2006 and $8.9 billion in 2007.
Then came the Great Recession.
Knowing when to pounce'
Before he talks about the biggest stain on Carlyle's record, Conway sets a red-ringed spiral notebook on the table, filled with clippings, economic data, reminders. One minute he is referencing the Bible, and the next he launches into an exposition on the economic significance of cargo shipping patterns.
With a shock of gray hair, he frequently pauses as he thinks. His tone is more conversational than Rubenstein's clipped cadence. His presence fills the conference room.
Described by some as fiery and focused, Conway is the investment genius who relies on Rubenstein's billions to feed his deals. On the golf course, he plays with a cigar locked in his teeth. He is in strict contrast to Rubenstein, the vegetarian and teetotaler.
Conway often arrives at the office by 6, allowing him to leave early enough to fit in a round at Burning Tree, where he and Akerson go head to head.
Conway, who is notoriously risk-averse, is as ferocious when evaluating a deal as he is when driving off the tee.
"Bill is like a lion stalking its prey on the Serengeti," Akerson said of investment meetings. "He knew when to inject himself and when to pounce."
Former Carlyle employees speak of Conway with reverence and fear. He is known to finish meetings with an exhortation to make money for investors.


"There are two things you don't want to do in life," one former Carlyle employee said. "Lie to your wife. And tell Bill Conway you lost money."
The conservative Conway experienced the seesaw of taking companies public and knew the risks. Rubenstein has pushed the idea for years.






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Carlyle takes on the world



"David had never been public," D'Aniello said. "He was much less sensitized to the risk." After its rival Blackstone Group went public in 2008 and saw its stock decimated, Carlyle paused.
"I wasn't sure I saw the advantages of being public," Conway said. "And there are a lot of advantages to being private. We can do things in private."
Lure of public capital
The financial crisis dealt blows to the firm's near-mythic reputation. March 2008 saw the $900 million collapse of Carlyle Capital, an offshore public company that invested in highly leveraged securities backed by Fannie Mae and Freddie Mac. Carlyle's founders and partners lost $300 million of their own money.
The "Triple-C implosion," as it is known inside the firm, is Carlyle's most embarrassing chapter.
"I just didn't think that the world would believe . . . that maybe the United States won't support Fannie Mae," Conway said. "To me, it was unthinkable. It was gone" snap "like that."
In May 2009, Carlyle paid $20 million to the state of New York to settle a pay-for-play scandal.
Rubenstein said those missteps had little bearing on the firm's long-term health: "If we didn't know how to invest, we would have imploded a long time ago."
But in the downturn, Rubenstein's fundraising slowed to a trickle, with investor commitments dropping 80 percent. Without money to invest, the entire private-equity model was threatened, along with Carlyle's business.
Conway was swayed: "It became apparent that having access to public capital will enable us to commit even more money to Carlyle's own deals."
To get that capital to invest and have public stock to lure prized talent, Conway has accepted the downside on an initial public offering: The firm will undergo unprecedented scrutiny and will have to answer to shareholders and meet quarterly performance marks.
To hedge its bets against the end of easy money, Carlyle has expanded into lower-return, less-risky investments such as infrastructure, real assets like oil, forests and minerals, and pension management. To reflect that diversification, it rebranded itself as a "global alternative asset manager."
Coming-out party
Carlyle has come screaming back from the recession, closing several landmark deals and returning $6.4 billion in capital and profit to its investors in the first quarter of this year. Carlyle's profits are a closely guarded secret that it will be required to divulge in government documents. Forbes reports that each of the founders is worth more than $2 billion.
They are globe-trotting plutocrats who visit popes and sheiks on Gulfstream jets. They have homes in the fabled communities of the ultra rich: Beaver Creek, Florida's Gold Coast, Potomac. They give away millions to the causes that move them.
When Mubadala, the investment arm for the emirate of Abu Dhabi, bought a 7.5 percent stake in Carlyle for $1.35 billion in cash in 2007, Carlyle enjoyed a big payday, distributing a piece of the windfall to every employee. The deal valued Carlyle at $20 billion. The value is now believed to be well below that.
Rubenstein said none of the founders has plans to cash out his stock. The three founders and the rest of the 99 partners also eat their own cooking they have $4 billion in Carlyle investments.
Rubenstein explains the IPO this way: "At some point in life you would like to get a reward for something you have done. We want to get the fruits of what we built. I intend to give away most of my money, and so I want to give it away. What I don't want to do is have my executor give it away."
Carlyle is leaving little to chance. It has government and regulatory strategists, speechwriters and more than a dozen public affairs professionals across the globe. A new chief financial officer is on board. Back-office operations have been fine-tuned. Management and operations committees are preparing to run the firm when the founders some day exit.
In the spirit of transparency, the firm issues glossy annual reports.
Rubenstein speaks at conferences from Davos to Aspen, chairs the Kennedy Center and makes splashy philanthropic gestures such as permanently lending a $21 million copy of the Magna Carta to the National Archives.
Even the reticent Conway is talking.
And Akerson's departure last year was almost a prelude to Carlyle's coming-out party. The head of Carlyle's flagship buyout operation walked away from hundreds of millions to lead GM, the most public of American companies.
For all its glasnost, the genius of Carlyle may well yet rest with the unsettled dynamic among its leaders that has been there from the Marriott breakfast.
"At the end of the day," Akerson said, "it wouldn't be the firm anywhere close to where it is if they were alone. It's a complicated, synergistic relationship."
http://www.washingtonpost.com/business/e...ory_4.html

[Jan Klimkowski]

Over the next several years, the firm filled its ranks with august business types like former Wall Street Journal editor Norman Pearlstein, General Electric's David Calhoun, former SEC chairman Arthur Levitt and former IBM chief Louis V. Gerstner Jr., who would become Carlyle's chairman.
"By sharing information, meeting with the media, answering the critics and explaining our business, we've changed our brand," Ullman said. "We're bringing glasnost to Carlyle."

The Washington Post clearly no longer cares about being taken seriously as a newspaper.

It just prints any old crap, and expects its readers to treat such as an accurate and truthful account.

[Peter Lemkin]

Over the next several years, the firm filled its ranks with august business types like former Wall Street Journal editor Norman Pearlstein, General Electric's David Calhoun, former SEC chairman Arthur Levitt and former IBM chief Louis V. Gerstner Jr., who would become Carlyle's chairman.
"By sharing information, meeting with the media, answering the critics and explaining our business, we've changed our brand," Ullman said. "We're bringing glasnost to Carlyle."

The Washington Post clearly no longer cares about being taken seriously as a newspaper.

It just prints any old crap, and expects its readers to treat such as an accurate and truthful account.

Well, naturally - they have the good brand name now. Its like Starbucks for most Americans; they could change one of their roasts to 25% dried dung and 75% Arabica and call it some fancy Westwood/Tribeca name and people would loooove it! They've been well trained, drained, pumped full of disinfo, drugs, lies, cognitive dissonance; angst; existential insecurity and threats to their own lives, living and freedoms - as well as paying taxes to rob others of all of that too. I find modern Western life as somewhat akin to a massive mind-control experiment - a mix between MK/ULTRA and the creation of Cognitive Dissonance in those who don't believe in the Big Lies psyop. For a great, if simple film, that captures the moment we are living in might I suggest the oldie but goodie The King Of Hearts.

[Magda Hassan]

How cash secretly rules surveillance policy

Today's congressional hearing was a joke. The reason: Firms like Booz Allen bankroll and own Congress. Here's how

BY DAVID SIROTA
Have you noticed anything missing in the political discourse about the National Security Administration's unprecedented mass surveillance? There's certainly been a robust and welcome discussion about the balance between security and liberty, and there's at least been some conversation about the intelligence community's potential criminality and constitutional violations.
Thanks to what I've previously called the No Money Rule, however, there have only been indirect references to how cash undoubtedly tilts the debate against those who challenge the national security state.
Those indirect references have come in the form of stories about the business model of Booz Allen Hamilton, the security contractor that employed Edward Snowden.
CNN/Money notes that 99 percent of the firm's multibillion-dollar annual revenues now come from the federal government. Those revenues are part of a larger and growing economic sector within the military-industrial complex a sector that, according to author Tim Shorrock, is "a $56 billion-a-year industry."
For the most part, this is where the political discourse about money stops. We are told that there are high-minded debates about security and liberty, with politicians of differing parties contributing to those debates from positions of principle and ideology. We are also told in passing that there's this massively profitable private industry that makes billions a year from the policy decisions that ultimately emerge from such a debate.
Thanks to the No Money Rule among the Washington press corps, though, there is mostly silence about the connection between the private industry and the public policy. Indeed, few in D.C. are willing to say that the policy debate may be, in part, driven by the private industry and almost nobody dares mention that politicians' attacks on surveillance critics may actually have nothing to do with principle, and everything to do with going to bat for their campaign donors.

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For a taste of what that kind of institutionalized corruption looks like, take a look at the amount of money Booz Allen Hamilton and its parent company The Carlyle Group spend on campaign contributions and lobbying. As you'll see, from Barack Obama to John McCain, many of the politicians now publicly defending the surveillance state and slamming whistleblowers like Snowden have taken huge sums of money from these two firms. Same thing for the political parties themselves they are bankrolled by these firms.
This is just an example from two companies among scores, but it exemplifies a larger dynamic. Simply put, there are huge corporate forces with a vested financial interest in making sure the debate over security is tilted toward the surveillance state and against critics of that surveillance state. In practice, that means when those corporations spend big money on campaign contributions, they aren't just buying votes for specific private contracts. They are also implicitly pressuring politicians to rhetorically push the discourse in a pro-surveillance, anti-civil liberties direction that is, in a direction that preserves the larger political assumptions on which the profits of the entire surveillance-industrial complex are based.
The success of that pressure is exemplified by the title of today's congressional hearing with the head of the NSA, Gen. Keith Alexander. The hearing doesn't ask why Alexander lied to Congress or whether the NSA has engaged in illegal acts. No, a Congress bankrolled by firms like Booz Allen predictably calls the hearing "How Disclosed NSA Programs Protect Americans and Why Disclosure Aids Our Adversaries," the two preconceived assumptions being that 1) the NSA's surveillance programs, which generate huge profits for companies like Booz, are beneficial to Americans' security and 2) critics of those programs hurt the country.
None of this, by the way, is exclusive to debates over domestic national security policy. As Booz Allen's business model suggests, there are also foreign policy implications to the pay-to-play culture.
As the New York Times notes, the firm is expanding its profit potential by "marketing" its surveillance and security services to Middle East dictatorships that want to strengthen their grip on power. According to the Washington Business Journal, that includes Kuwait, Qatar, Omar, the United Arab Emirates, Saudi Arabia, Bahrain and "other countries" working to crush democratic dissent "associated with the Arab Spring." That means American politicians who are financed by Booz and other firms with a similar multinational business model not only have a vested campaign-contribution interest in shilling for the domestic surveillance state that their donors profit from. They also have a similar interest in denigrating the democratic protest movements that challenge Mideast surveillance states that make those donors big money, too.
Obviously, this kind of moneyed influence should be a critical focus of the political reporting on politicians' declarations about Snowden, the NSA, foreign policy and surveillance in general. When, for instance, a journalist reports on a politician slamming critics of the surveillance state, the public should be told whether that politician has taken money from firms that make their money off the continued expansion of that surveillance state. But that isn't happening thanks to the aforementioned No Money Rule in the Washington press and that rule isn't just about etiquette. On national security issues, it is often about the elite agenda-setting Washington media outlets that also financially rely on an ever-expanding national security state.
For a microcosmic (but not the only) example of that little-mentioned reliance and how it may skew the way the elite media frame the national security debate look at these side-by-side pages from the ultimate agenda-setting D.C. newspaper, Politico:

As you can see, the ad on the left side is for a defense contractor. Like surveillance/security firms, it is part of a larger industry that relies on the ever-expanding national security state for its profits, and that therefore is hostile to national security state critics like Snowden. That industry invests heavily not only in politicians, but in advertising in Washington publications like Politico. Is it any coincidence that (as you can see on the right page) such publications loyally frame the debate over Snowden not as a question that ponders possible positive qualities (heroism, courage, etc.) but as a question exclusively of negatives: specifically, did he commit treason or is he a traitor?
Noting all of this isn't to allege conspiratorial micromanagement of politicians and media by the military-intelligence community. It isn't, for instance, to claim that everything that comes out of surveillance defenders' mouths comes from talking points provided by Booz Allen's lobbyists, nor is it to claim that Politico writers are directly ordered by their advertisers to depict national security critics on exclusively negative terms. It is actually to suggest something much more pernicious and ubiquitous than that.
As anyone who has worked in Washington politics and media well knows, the capital is not a place of competing high-minded ideologies; in terms of the mechanics of legislation and policy, it is a place where monied interests duke it, where those with the most money typically win, and where a power-worshiping media is usually biased toward the winners. In the context of money and national security, there is a clear imbalance there are far fewer moneyed interests whose business is transparency and protecting civil liberties than there are moneyed interests whose business is secrecy and curtailing civil liberties. That imbalance has consequently resulted in a larger environment in Washington that is so dominated by national-security-state money that the capital's assumptions reflexively, unconsciously and automatically skew toward the national security state without overt corporate orders ever having to be given to politicians or media outlets.
If the simplest, most straightforward explanation is often the most accurate, then this skewing is almost certainly part of why the pro-surveillance terms of the political debate in Washington are so at odds with public opinion polling on the matter. Big Money has helped create that disconnect, even though Big Money is somehow written out of the story.
http://www.salon.com/2013/06/18/how_cash...ce_policy/

[Magda Hassan]

Big money in aged 'care' (warehousing useless eaters) so Carlyle is in it. Quite a lot of complaints against their nursing homes too. I wonder if they are in private prisons and immigrant warehousing as well.

HCR Manor Care

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The HCR Manor Care Headquarters in Toledo, Ohio


Manor Care, Inc., through its operating group HCR Manor Care, is a major provider in the United States of both short-term post-acute and long-term care. As of 2007, it had more than 500 skilled nursing and rehabilitation centers, assisted living facilities, outpatient rehabilitation clinics, and hospice and home health care offices, and over 60,000 employees.[SUP][1][/SUP] The company is headquartered in Toledo, Ohio. In July 2007, it agreed to a $4.9 billion buyout offer from the private equity firm Carlyle Group.

Operations

The company operates primarily under the Heartland, ManorCare Health Services and Arden Courts names. In 2006, it earned $167 million on sales of $3.6 billion.[SUP][2][/SUP]
As of the end of 2006, the company operated 278 skilled nursing facilities, 65 assisted living facilities, 116 hospice and home health offices, and 92 outpatient therapy clinics, located in 30 states, primarily in Florida, Illinois, Michigan, Ohio, and Pennsylvania. About 73% of its revenue comes from higher-paying Medicare and private-pay patients.[SUP][3][/SUP]
As of the end of 2006, the company had approximately 59,500 employees, including part-time employees. About 7,100 employees were salaried; the rest were hourly employees. About 1,400 employees were members of labor unions.[SUP][4][/SUP]

History

Manor Care began in 1959, when Stewart Bainum, Sr., a former plumber, opened a nursing home in Wheaton, Maryland. The company went public in 1969.
In 1980, the company merged with the hotel company Quality International, later renamed Choice Hotels, which was also run by Bainum. In 1982, the company acquired nursing home operator Cenco, for $209 million; total facilities were 105, in 19 states. In 1987, Stewart Bainum, Jr., became chairman and CEO, succeeding his father.[SUP][5][/SUP]
In 1992, the company spun off Vitalink Pharmacy Services into a public company with a value of $236 million. In 1996, the company spun off Choice Hotels, refocusing its business on health care.
In 1998, Ohio-based Health Care and Retirement Corporation merged with Manor Care to become HCR Manor Care. The company headquarters was consolidated in Toledo.
In March 2000, Stewart Bainum, Jr., and a management group made separate offers to buy the company, which the company's board rejected. His term as chairman of the board ended in 2001, and in 2002 he left the Board.

2007 buyout offer

In July 2007, the company agreed to a $4.9 billion buyout offer from the private equity firm Carlyle Group; it will no longer be a publicly traded corporation. Analysts said that Carlyle was interested in the company because it owns, rather than leases, nearly all its own facilities and boasts arguably the best real-estate portfolio in the business, with generally well-maintained, newer facilities in good locations, and little mortgage debt. By borrowing against the property to finance the buyout, Manor Care and Carlyle can carry out the deal on favorable terms.[SUP][3][/SUP] The buyout was completed at $67 per share on December 21, 2007. In 2010 HCR Manorcare entered into a sale-leaseback transaction whereby the company sold off 338 post-acute, skilled nursing and assisted living facilities for $6.1 Billion . These are now owned by HCP, a REIT or Real Estate Investment Trust based within the state of California, for $6.1 billion. These assets are still operated by HCR ManorCare.[SUP][6][/SUP]

References

• "Corporate profile"
  , accessed July 10, 2007
  
• "Carlyle to buy Manor Care for $6.3 billion: Latest health care provider to be acquired by private equity buyer"], Bloomburg, May 16, 2008
  
• Theo Francis, "Real Estate Is Driver Of Manor Care Buyout Deal"
  , Wall Street Journal, July 3, 2007
  
• Annual report, 2006 (pdf)
  
  
• "Manor Care Through the Years", Washington Post, July 9, 2007
  
• HCP to Acquire Assets of HCR Manorcare in $6.1 Billion Sale-Leaseback
  
  

External links

• Company website
  
  
• HCR Manor Care Foundation
  
  

[Roger DeLaria]

I worked for a company several years ago that received a major 8-figure investment from the Carlyle Group. I met two "representatives" from the company a couple of times, and didn't really know too much about them(I didn't need to, I was low on the totem pole), except I was told by my manager that they were associated with the Bush family. Small world.

I also had an interview once a few years back with Halliburton here in CO. It went well, but I just got a weird vibe. I was glad I didn't get an offer, even though I had been out of work for awhile and was pretty desperate, the commute would have been hell, too.

[Magda Hassan]

Probably a lucky escape for you. Colorado has quite a lot of military, weapons and aerospace industries doesn't it? That would be right up Carlyle's alley.

[Roger DeLaria]

Yeah, there's more than a few members of the military-industrial complex here. ::trenchcoatspy::

This might be belong in another thread, but about a mile northeast of my house is the sight of the old Lowry Air Base(very few remaining buildings left, all suburban mixed-use redevelopment) where Gen. Ed Lansdale taught at the Strategic Intelligence School (1948-49).