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One view does not exclude the other. Predators have a role in ecosystems, culling the weak and the sick from the herd. PEs are corporate predators, preying on b

One view does not exclude the other. Predators have a role in ecosystems, culling the weak and the sick from the herd. PEs are corporate predators, preying on bloated orgs, killing them, returning whatever value still held (trademarks, patents) back to the "environment". But of course that "pure market" viewpoint doesn't take into account the social costs and individual pains these operations entail.

kolbe 4y ago
That's not what he's talking about. Ruthlessness has its role in a robust ecosystem, but screwing with a company in a way that destroys its viability simply to trick some retail investors and pension funds into buying the worthless shell is not part of a robust ecosystem.
- lmz 4y ago
  Maybe it weeds out the more stupid investors.
  - che_shirecat 4y ago
    unironically, yes. in an ideal capitalist system, money should flow to those who can best allocate it, so stupid investors losing $$$ to more savvy investors in financial pvp is the market working as intended.
  - kolbe 4y ago
    In a libertarian world, you're right. But in the USA today, those "stupid investors" are often pension funds who will just tax you more when they lose it all.
youngtaff 4y ago
Apart from they wreck perfectly viable businesses… Let’s take Debenhams in the UK as an example - Used to own all it’s stores - Got bought by PE (who attached the debt they used to buy Debenhams to Debenhams so the PE group now owe zero) - Split the stores from the retail operation but made the retail operation lease them on ever increasing rents - Sold the stores to British Land - Eventually Debenhams retail can’t afford the rents (as they only ever increase), and the debt payments so goes bust Similar patterns with PE acquired companies not being able to afford their debt payments is common, coupled with PE companies extracting any free cash as a dividend shortly after purchase What PE companies are doing isn’t culling the weak but extracting the most they can from businesses and then leaving suppliers, employees, pension scheme members to pick up the cost

kolbe 4y ago

That's not what he's talking about. Ruthlessness has its role in a robust ecosystem, but screwing with a company in a way that destroys its viability simply to trick some retail investors and pension funds into buying the worthless shell is not part of a robust ecosystem.

lmz 4y ago
Maybe it weeds out the more stupid investors.
- che_shirecat 4y ago
  unironically, yes. in an ideal capitalist system, money should flow to those who can best allocate it, so stupid investors losing $$$ to more savvy investors in financial pvp is the market working as intended.
- kolbe 4y ago
  In a libertarian world, you're right. But in the USA today, those "stupid investors" are often pension funds who will just tax you more when they lose it all.

youngtaff 4y ago

Apart from they wreck perfectly viable businesses… Let’s take Debenhams in the UK as an example - Used to own all it’s stores - Got bought by PE (who attached the debt they used to buy Debenhams to Debenhams so the PE group now owe zero) - Split the stores from the retail operation but made the retail operation lease them on ever increasing rents - Sold the stores to British Land - Eventually Debenhams retail can’t afford the rents (as they only ever increase), and the debt payments so goes bust Similar patterns with PE acquired companies not being able to afford their debt payments is common, coupled with PE companies extracting any free cash as a dividend shortly after purchase What PE companies are doing isn’t culling the weak but extracting the most they can from businesses and then leaving suppliers, employees, pension scheme members to pick up the cost