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So what happens to the mom and pop hardware store that's been running for 30 years when mom and pop want to retire? They just have to shut their doors? Banning

So what happens to the mom and pop hardware store that's been running for 30 years when mom and pop want to retire? They just have to shut their doors? Banning all M&A would run into a brick wall of unintended consequences. If no one can sell their business, then a significant percent of potential small business owners just wouldn't start businesses. Then what would happen? Those people would go get jobs. Instead of them owning the things they create, those things would be owned by their employers. Instead of having the issue where someone goes and creates Goodreads but it gets bought by Amazon, nobody would ever create Goodreads. All you've done is save Amazon the acquisition cost.

thomasahle 3y ago
> So what happens to the mom and pop hardware store that's been running for 30 years when mom and pop want to retire? They just have to shut their doors? They could sell it to another mom and pop? It's only an M&A if the shop is bought by / becomes part of another business. If nobody wants to continue running the independent shop, it doesn't make much difference to consumers if a chain buys it, or if it closes down and the chain just opens a new shop there.
- idopmstuff 3y ago
  If the only people who can buy businesses are individuals, you've cut the potential acquirer pool, and thus the value, by an enormous amount. > If nobody wants to continue running the independent shop, it doesn't make much difference to consumers if a chain buys it, or if it closes down and the chain just opens a new shop there. You're pointing out exactly why banning M&A would be good for big businesses. Now instead of having to buy out the little guy, they just wait for it close and then buy all the assets (can assets be sold under this regime? do you just have to throw everything away?) and reopen under their own name. Now the mom and pop lost a bunch of money and the big company got a new location at a big savings.
  - Apocryphon 3y ago
    Why is a buyout even the only option? Just find new management. Keep it in the family. Turn it into a co-op. There’s also such as a thing as community businesses, apparently.
    - idopmstuff 3y ago
      I'm guessing you've never run a small business? Sometimes people want to exit. They want to retire, move onto a new chapter of their lives and not be involved in the business anymore. Finding new management doesn't allow that - they can take on the day to day, but you still own the place and are ultimately responsible. Keeping it in the family isn't an option if you don't have family that want it. If you have multiple family members that want it, you can give it to one and probably cause conflict, or you can have them share management/ownership of it and probably also cause conflict. Turn it into a co-op? What if the owners have no idea how to do this? What if they don't want to? Why should people who have created a business not be allowed to sell it and cash out? Why can't they get a payoff for their investment and move on? The solutions you're proposing are all about the community and totally ignore the actual people who spent years of their life getting the business going and probably took meaningful financial risk to do so. Why should we just ignore their desires and tell them what they're allowed to do with their business?
      - Apocryphon 3y ago
        Fortunately in a democratic society, the hoi polloi need not actual experience to have a say- nor to have a vote on changing policy.
      - TeMPOraL 3y ago
        Well, fine. So maybe banning M&As is not the right way. But what is, then? Because the problem is real and severe, and it's also just another case of a more general problem - how to stop the market from creating a class of specialists gaming a single metric? It's prevalent everywhere you look. As you say, M&As let small business owners retire or move away, without being prisoners of their own business. But the failure mode is companies being built with exit in mind, existing to be flipped - this is doing huge damage to the markets and peoples' lives right now. Or take housing: it's nice that individuals have a way to sell their house and recover some of the money and effort put into it, when their kids leave the nest, or they retire, or they just want to move to some other location. But the failure mode of this is flipping - people and companies who buy properties, "improve" them to maximize resale value, whether the "improvements" make any sense or not for future tenants, and sell them to various actors. This creates a huge distortion on the real estate market, to the point that housing is now built for flipping, not for living. (There's also a secondary and equally socially bad effect of owners opposing anything whatsoever that could lead to drop in (growth of) housing prices in their area.) Or take finance: it's not hard to see the failure modes created by professional finance class, that's busy optimizing money flows in isolation from everything they relate to in the real world. Or, take corporate management, and the rise of MBA class: specialists in running business as an abstract profit-generating machine, in complete isolation of what the business does and means in the real world. Etc. etc. This is the big problem I think we're facing: stopping over-optimization.
- yibg 3y ago
  So only businesses under a certain size can ever be sold. If you happen to do well and the business is worth say 10 million, which mom and pop can buy it?
Yoofie 3y ago
Ok, we can ban M&A for all businesses who exceed $x million in revenue. Mom & pop can still put the work in and cash out, but bigger businesses are prohibited from eating eating their competitors and preventing disruptive businesses from growing and having a fair shot in the market. The $x million limit can be decided upon based on the industry and other factors. >nobody would ever create Goodreads Lots of people create of businesses and pursue non-profitable enterprises for non-profitable reasons.
wyre 3y ago
>shut their doors Yes, that’s usually what happens if they don’t have family to take over the business or employees to sell the business too. >business owners just wouldn’t start businesses. Maybe in the VC world but those aren’t small businesses are they? Are people really starting restaurants and yarn shops solely so they can sell the business later down the road? Or is it because they have an entrepreneurial spirit and want to build a business the community is lacking in. It’s hard to believe you honestly think people only start businesses so they can sell it later on.
- idopmstuff 3y ago
  > Yes, that’s usually what happens if they don’t have family to take over the business or employees to sell the business too. No, believe it or not, most people with small businesses, which are worth hundreds of thousands or single digit millions of dollars, don't just let the asset disappear for no value when they can find a broker and sell it. > Maybe in the VC world but those aren’t small businesses are they? What are you talking about? The first sentence of my post that you're responding to literally says "mom and pop hardware store" - where do you see anything about VC funding? > It’s hard to believe you honestly think people only start businesses so they can sell it later on. At no point did I say that. I would wager heavily that you've never owned a small business. Most people don't start businesses for the sole purpose of selling them, but the fact that you can sell your business is important for all kinds of reasons. Businesses generally require startup capital, much of which is provided by small business loans that the owner must personally guarantee. If you're not allowed to sell your business, you're trapped under those loans. Need to move somewhere? You can't. Want to get out and get a job? You can't. Think of it like buying a house. If you couldn't sell a house, how do you think that would affect the market? I'll tell you how - more people would rent, because otherwise most of them would be trapped in their home for the life of the mortgage. Does that mean that most people buy homes solely so they can sell them later down the road? It does not.

thomasahle 3y ago

> So what happens to the mom and pop hardware store that's been running for 30 years when mom and pop want to retire? They just have to shut their doors? They could sell it to another mom and pop? It's only an M&A if the shop is bought by / becomes part of another business. If nobody wants to continue running the independent shop, it doesn't make much difference to consumers if a chain buys it, or if it closes down and the chain just opens a new shop there.

idopmstuff 3y ago
If the only people who can buy businesses are individuals, you've cut the potential acquirer pool, and thus the value, by an enormous amount. > If nobody wants to continue running the independent shop, it doesn't make much difference to consumers if a chain buys it, or if it closes down and the chain just opens a new shop there. You're pointing out exactly why banning M&A would be good for big businesses. Now instead of having to buy out the little guy, they just wait for it close and then buy all the assets (can assets be sold under this regime? do you just have to throw everything away?) and reopen under their own name. Now the mom and pop lost a bunch of money and the big company got a new location at a big savings.
- Apocryphon 3y ago
  Why is a buyout even the only option? Just find new management. Keep it in the family. Turn it into a co-op. There’s also such as a thing as community businesses, apparently.
  - idopmstuff 3y ago
    I'm guessing you've never run a small business? Sometimes people want to exit. They want to retire, move onto a new chapter of their lives and not be involved in the business anymore. Finding new management doesn't allow that - they can take on the day to day, but you still own the place and are ultimately responsible. Keeping it in the family isn't an option if you don't have family that want it. If you have multiple family members that want it, you can give it to one and probably cause conflict, or you can have them share management/ownership of it and probably also cause conflict. Turn it into a co-op? What if the owners have no idea how to do this? What if they don't want to? Why should people who have created a business not be allowed to sell it and cash out? Why can't they get a payoff for their investment and move on? The solutions you're proposing are all about the community and totally ignore the actual people who spent years of their life getting the business going and probably took meaningful financial risk to do so. Why should we just ignore their desires and tell them what they're allowed to do with their business?
    - Apocryphon 3y ago
      Fortunately in a democratic society, the hoi polloi need not actual experience to have a say- nor to have a vote on changing policy.
    - TeMPOraL 3y ago
      Well, fine. So maybe banning M&As is not the right way. But what is, then? Because the problem is real and severe, and it's also just another case of a more general problem - how to stop the market from creating a class of specialists gaming a single metric? It's prevalent everywhere you look. As you say, M&As let small business owners retire or move away, without being prisoners of their own business. But the failure mode is companies being built with exit in mind, existing to be flipped - this is doing huge damage to the markets and peoples' lives right now. Or take housing: it's nice that individuals have a way to sell their house and recover some of the money and effort put into it, when their kids leave the nest, or they retire, or they just want to move to some other location. But the failure mode of this is flipping - people and companies who buy properties, "improve" them to maximize resale value, whether the "improvements" make any sense or not for future tenants, and sell them to various actors. This creates a huge distortion on the real estate market, to the point that housing is now built for flipping, not for living. (There's also a secondary and equally socially bad effect of owners opposing anything whatsoever that could lead to drop in (growth of) housing prices in their area.) Or take finance: it's not hard to see the failure modes created by professional finance class, that's busy optimizing money flows in isolation from everything they relate to in the real world. Or, take corporate management, and the rise of MBA class: specialists in running business as an abstract profit-generating machine, in complete isolation of what the business does and means in the real world. Etc. etc. This is the big problem I think we're facing: stopping over-optimization.
yibg 3y ago
So only businesses under a certain size can ever be sold. If you happen to do well and the business is worth say 10 million, which mom and pop can buy it?

Yoofie 3y ago

Ok, we can ban M&A for all businesses who exceed $x million in revenue. Mom & pop can still put the work in and cash out, but bigger businesses are prohibited from eating eating their competitors and preventing disruptive businesses from growing and having a fair shot in the market. The $x million limit can be decided upon based on the industry and other factors. >nobody would ever create Goodreads Lots of people create of businesses and pursue non-profitable enterprises for non-profitable reasons.

wyre 3y ago

>shut their doors Yes, that’s usually what happens if they don’t have family to take over the business or employees to sell the business too. >business owners just wouldn’t start businesses. Maybe in the VC world but those aren’t small businesses are they? Are people really starting restaurants and yarn shops solely so they can sell the business later down the road? Or is it because they have an entrepreneurial spirit and want to build a business the community is lacking in. It’s hard to believe you honestly think people only start businesses so they can sell it later on.

idopmstuff 3y ago
> Yes, that’s usually what happens if they don’t have family to take over the business or employees to sell the business too. No, believe it or not, most people with small businesses, which are worth hundreds of thousands or single digit millions of dollars, don't just let the asset disappear for no value when they can find a broker and sell it. > Maybe in the VC world but those aren’t small businesses are they? What are you talking about? The first sentence of my post that you're responding to literally says "mom and pop hardware store" - where do you see anything about VC funding? > It’s hard to believe you honestly think people only start businesses so they can sell it later on. At no point did I say that. I would wager heavily that you've never owned a small business. Most people don't start businesses for the sole purpose of selling them, but the fact that you can sell your business is important for all kinds of reasons. Businesses generally require startup capital, much of which is provided by small business loans that the owner must personally guarantee. If you're not allowed to sell your business, you're trapped under those loans. Need to move somewhere? You can't. Want to get out and get a job? You can't. Think of it like buying a house. If you couldn't sell a house, how do you think that would affect the market? I'll tell you how - more people would rent, because otherwise most of them would be trapped in their home for the life of the mortgage. Does that mean that most people buy homes solely so they can sell them later down the road? It does not.