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> When PE loads up a firm with supposedly unsustainable billions of debt, someone is on the other side of that transaction, lending the billions. Who does that

> When PE loads up a firm with supposedly unsustainable billions of debt, someone is on the other side of that transaction, lending the billions. Who does that and why? Are they perpetual suckers, unaware of the decades of experience we have doing this? In at least some of the cases, the answer is absolute corruption with PE paying the other party “on the side” to sign off on a deal only a sucker would agree to. See for example this piece of investigative journalism into Medical Properties Trust and just how many red flags and obvious bribes were involved (not to mention potential murder to cover up their misdeeds!!): https://prospect.org/health/2023-05-23-quackonomics-medical-properties-trust/ https://prospect.org/health/2023-05-23-quackonomics-medical-...

multicast 3y ago
Wrong. Banks who provided billions in loans to PE firms for decades, are now getting more cautious. But not because they fear of a failed investment, but certain investors of the bank do and that means problem for the bank. The Banks actually don't care what happens to the company being bought. An investment bank which provides a loan never sits on its debt. They are bundled into financial products like CDO, CLO etc and sold to institutional and wealthy private investors. This bought the rise to a new ''era'' recently, where PE firms set up special investment funds to fund big acquisitions of other PE firms. The reason being the current situation of the financial markets and the general negative mood in the markets. Example with a retailer from the UK, which turned costly for the investment bank: https://www.youtube.com/watch?v=DKYKT4pvYYA&pp=ygUTZnQuY29tIGdvbGRtYSBzYWNocw%3D%3D https://www.youtube.com/watch?v=DKYKT4pvYYA&pp=ygUTZnQuY29tI...
- ComputerGuru 3y ago
  I wasn’t referring to the banks but the owners (or rather, the controllers) of the businesses that can obtain cash against the value of their property/assets or from the value of their business. These aren’t always individual loans in the hundreds of millions of dollars; the debt can be accrued piecemeal. (I’m also not talking in general but rather about certain specific cases/forms.)
  - multicast 3y ago
    In a high interest rate and pessimistic market environment, raising funds for a stumbling business is not easy at all. PE firms are specialized in such risky investments, thus the option of a buyout from a PE firm is the best thing that can happen to an owner. Its the owners own free will to sell or getting the hard way and try to save his business.
- civilized 3y ago
  The comment above completely fails to address the parent's claim. The parent claimed outright corruption in some cases, and cited an article which extensively documents such outright corruption. "Wrong" is applicable to this reply rather than the original post.
  - multicast 3y ago
    Again, wrong. The original post completely fails in its argumentation. As I stated above the investment banks providing the loans are not 'perpetual suckers'. They know what they are doing. If PE financing were such a bad game nobody would provide loans in the first place. An industry achieving good returns for decades does simply not need to bribe capital providers. Bribing high ranking decision making bankers is the most ridiculous thing I've ever heard, this is not an governmental official. Claiming overall corruption as a fact and linking to one article (which isn't even about the capital providers for PE firms - the overall point of the original post) is simply irrelevant.

multicast 3y ago

Wrong. Banks who provided billions in loans to PE firms for decades, are now getting more cautious. But not because they fear of a failed investment, but certain investors of the bank do and that means problem for the bank. The Banks actually don't care what happens to the company being bought. An investment bank which provides a loan never sits on its debt. They are bundled into financial products like CDO, CLO etc and sold to institutional and wealthy private investors. This bought the rise to a new ''era'' recently, where PE firms set up special investment funds to fund big acquisitions of other PE firms. The reason being the current situation of the financial markets and the general negative mood in the markets. Example with a retailer from the UK, which turned costly for the investment bank: https://www.youtube.com/watch?v=DKYKT4pvYYA&pp=ygUTZnQuY29tIGdvbGRtYSBzYWNocw%3D%3D https://www.youtube.com/watch?v=DKYKT4pvYYA&pp=ygUTZnQuY29tI...

ComputerGuru 3y ago
I wasn’t referring to the banks but the owners (or rather, the controllers) of the businesses that can obtain cash against the value of their property/assets or from the value of their business. These aren’t always individual loans in the hundreds of millions of dollars; the debt can be accrued piecemeal. (I’m also not talking in general but rather about certain specific cases/forms.)
- multicast 3y ago
  In a high interest rate and pessimistic market environment, raising funds for a stumbling business is not easy at all. PE firms are specialized in such risky investments, thus the option of a buyout from a PE firm is the best thing that can happen to an owner. Its the owners own free will to sell or getting the hard way and try to save his business.
civilized 3y ago
The comment above completely fails to address the parent's claim. The parent claimed outright corruption in some cases, and cited an article which extensively documents such outright corruption. "Wrong" is applicable to this reply rather than the original post.
- multicast 3y ago
  Again, wrong. The original post completely fails in its argumentation. As I stated above the investment banks providing the loans are not 'perpetual suckers'. They know what they are doing. If PE financing were such a bad game nobody would provide loans in the first place. An industry achieving good returns for decades does simply not need to bribe capital providers. Bribing high ranking decision making bankers is the most ridiculous thing I've ever heard, this is not an governmental official. Claiming overall corruption as a fact and linking to one article (which isn't even about the capital providers for PE firms - the overall point of the original post) is simply irrelevant.