In June of last year, I posted that Binder and Binder, the largest entity representing Social Security claimants, had been acquired in 2010, at least in part, by HIG, a private equity firm based in Miami, in a leveraged buyout.
At the time I knew essentially nothing about private equity firms. Since then, the publicity about Mitt Romney's involvement in Bain Capital, another private equity firm, has educated me a tiny bit on private equity companies. It appears that Bain was, in the main, acquiring troubled companies and trying to turn them around for resale at a tidy profit. Sometimes they were unable to turn the companies around and the companies were closed -- usually with Bain making a tidy profit despite the closure.
I suppose that there are different private equity models than those employed by Bain. Bain's operations were surely a good deal more complex than what has been described in the press. I have no idea how HIG operates or what triggered this acquisition or what has happened since HIG acquired at least part of Binder and Binder. Still, the involvement of a private equity firm in representing Social Security claimants still seems awfully weird and somewhat troubling to me.
I am somewhat amused by the thought of HIG's MBAs digging deep into the guts of the business of representing Social Security claimants and being confronted again and again with roadblocks imposed by the Social Security Act and Social Security's regulations and policies. I have trouble imagining them actually reading client files and attending client hearings to truly educate themselves about this messy business. I wonder what those MBAs thought about those Wall Street Journal articles about Binder and Binder. Did they think they didn't matter since few Social Security claimants read the Wall Street Journal? Did they realize the problems those articles could cause Binder and Binder with Administrative Law Judges and Social Security in general -- problems that would inevitably affect the company's bottom line?As I say, the involvement of a private equity company in this business just seems awfully weird to me.