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Almost any company by definition will be 'profit-obsessed'. The solution is smart regulation that prevents abuses. Public hospice agencies would come with thei

by koboll 3y ago

Almost any company by definition will be 'profit-obsessed'. The solution is smart regulation that prevents abuses. Public hospice agencies would come with their own set of constraints that enable different kinds of bad behavior; I don't exactly trust Jacobin to dispassionately judge whether those are better than a well-regulated private industry could be.

LightBug1 3y ago
Nah, private equity is a different beast than "any company". 1) Normal business: how can we innovate such that we maximise profit off the back of a decent product. 2) Private equity: how can buy this company with as much debt in its own name while extracting as much resource as we can via dividends.
- rhaway84773 3y ago
  (2) isn’t private equity. Private equity simply means funds investing in private, not public, firms. In fact, if you look at other comments people post about how companies are terrible because they have to please shareholders, private equity actually solves that problem. What you’re talking about is LBOs (leveraged buyouts) which are a certain kind of private equity investment.
  - Aeolun 3y ago
    > private equity actually solves that problem Private equity firms still try to please their shareholders, they’re just not beholden to a public stock price.
  - 1_1xdev1 3y ago
    (2) is how private equity tends to operate. You’re correct about the definition. And, no, lbos are the buyer borrowing a lot to buy another company, while using the assets of the acquisition as collateral. The debt is still in the buyer’s name AFAIK (may be wrong)
  - xg15 3y ago
    > private equity actually solves that problem. How does it solve that problem?
    - snake_doc 3y ago
      Private equity owners often have less short term incentives because their funds are usually 10 years long. On average, an investment from purchase to exit may take ~5 years. Whereas a public company with large institutional owners will have to respond to market feedback in real-time, i.e they are more likely to follow the herd if institutions (pension funds) demand a shift in industry trends (ie ESG). Whereas, private equity have no such concerns.
skinnymuch 3y ago
Why would companies founded not to be profit obsessed be that way? A lot to coops and more egalitarian company concepts don’t require what you’re saying. I won’t comment on regulation being a solution to anything market related.
- deleted 3y ago
  [deleted]
- AndrewKemendo 3y ago
  This is why I’m starting a cooperative instead of a corporation
emodendroket 3y ago
It seems like part of what makes this sector attractive is that regulation is weak and it's unclear who's supposed to be in charge, at least according to the article.

by koboll 3y ago

LightBug1 3y ago

Nah, private equity is a different beast than "any company". 1) Normal business: how can we innovate such that we maximise profit off the back of a decent product. 2) Private equity: how can buy this company with as much debt in its own name while extracting as much resource as we can via dividends.

rhaway84773 3y ago
(2) isn’t private equity. Private equity simply means funds investing in private, not public, firms. In fact, if you look at other comments people post about how companies are terrible because they have to please shareholders, private equity actually solves that problem. What you’re talking about is LBOs (leveraged buyouts) which are a certain kind of private equity investment.
- Aeolun 3y ago
  > private equity actually solves that problem Private equity firms still try to please their shareholders, they’re just not beholden to a public stock price.
- 1_1xdev1 3y ago
  (2) is how private equity tends to operate. You’re correct about the definition. And, no, lbos are the buyer borrowing a lot to buy another company, while using the assets of the acquisition as collateral. The debt is still in the buyer’s name AFAIK (may be wrong)
- xg15 3y ago
  > private equity actually solves that problem. How does it solve that problem?
  - snake_doc 3y ago
    Private equity owners often have less short term incentives because their funds are usually 10 years long. On average, an investment from purchase to exit may take ~5 years. Whereas a public company with large institutional owners will have to respond to market feedback in real-time, i.e they are more likely to follow the herd if institutions (pension funds) demand a shift in industry trends (ie ESG). Whereas, private equity have no such concerns.

skinnymuch 3y ago

Why would companies founded not to be profit obsessed be that way? A lot to coops and more egalitarian company concepts don’t require what you’re saying. I won’t comment on regulation being a solution to anything market related.

deleted 3y ago
[deleted]
AndrewKemendo 3y ago
This is why I’m starting a cooperative instead of a corporation

emodendroket 3y ago

It seems like part of what makes this sector attractive is that regulation is weak and it's unclear who's supposed to be in charge, at least according to the article.