Paul Solman of PBS NewsHour continues his series, “Making $ense: Your Guide to the Economy,”by looking at private equity. Private-equity firms buy struggling companies, borrow money to improve the businesses and sell them. The story notes one problem is many such companies become laden with debt. Solman says:
“Half of the S&P-rated firms that went bankrupt last year, besides banks, that is, were private-equity acquisitions, including Chrysler, Simmons, Six Flags, and ‘Reader’s Digest,’ where retirees, including executives, had their pensions slashed by a debt-driven bankruptcy.”
The segment offers a great primer on how the investment works and notes the companies may have difficulty repaying the loans when the debts come due.
Today’s Tip: Brush up on basics.
Explanatory pieces like this really do help your audience. To do them, you need to understand the basics of business, economics and finance. Check out “Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics” by Henry Hazlitt. Or try “Basic Economics: A Citizen’s Guide to the Economy” by Thomas Sowell. Another text is “Financial Analysis Tools and Techniques: A Guide for Managers” by Erich Helfert. Other good ones are “Accounting Demystified” by Jeffry R. Haber and The McGraw-Hill 36-Hour Course In Finance for Non-Financial Managers by Robert Cooke and The Edgar Online Guide to Decoding Financial Statements: Tips, Tools, and Techniques for Becoming a Savvy Investor by Tom Taulli. There are also books in the “Dummies” series on economics and financial reports. A former colleague and I once bought accounting workbooks and each week plowed through the lessons together. It helped us stay focused on the task and better understand earnings reports.
- For free training, check out BusinessJournalism.org.
- Apply for the Wharton Seminars for Business Journalists, which will be held this year Oct. 10-13 in Philadelphia. The Wharton seminar is pricey, but several organizations offer scholarships, and an early-payment price of $1,495 is available through Aug. 1.
- Befriend a business professor at a local college or university. Take him or her to lunch and ask about what consumers need to know.
- Morningstar Inc.’s free investing classroom of 172 self-paced modules will give you a grounding in stocks, bond, mutual funds and other investing.
- Starting next week, you can check out an archived Webinar on “Unlocking Financial Statements” on Business Journalism.org.
- The Nieman Foundation at Harvard University compiled a list of 12 things you need to remember to be a good economics reporter. The list notes that everybody has an angle. When you have the basic background, you strengthen you BS detector and ensure you cover all sides.