Some might want to put sole blame on the economy for the shape Guitar Center is in but a recent article has plenty of blame to go around to account GC's alleged $1.6billion (yes BILLION!) debt.
From The Tone King: On June 27, 2007 GC was bought out by Bain Capital for $1.9 billion plus assumed debt. With the debt, Bain had written a $2.1 billion dollar check for Guitar Center and all of its subsidiaries.
For those who donít know, Bain Capital is a private equity and venture capital group that was founded in 1984 by current presidential nominee Mitt Romney. Basically, Bain buys companies, restructures them, and then sells them off at a profit. There are some success stories, and some no-so-success stories.
Unfortunately, when it came to Guitar Center, Bain hasnít had much luck. One of the common complaints among GC employees after the restructuring involves their compensation. Itís hard to believe, but Guitar Center used to offer comprehensive pension and benefit plans. Itís the usual story. Outsource IT to India, freeze raises for years, increase management but cutting back on sales personnel by making them part-time, making it difficult to keep the floor covered.
And being hit by a recession right after the buy out didnít help matters any.
It's an interesting read. Check out the whole article at The Tone King.