4 ms·

why not get mad at the dentist for selling out then? people are acting like there is only 1 side on all of these deals.

TeMPOraL 3y ago
Because those deals are targeted "offers you can't refuse", by design. Consider: surely there is a price for which you would be willing to sell me your business, or your house, pretty much on the spot. The current value of your assets could be X. Maybe you're reluctant to sell for anything under 120% X. Maybe you know your neighbors will hate you if you sell it, so you really won't do it for less than 140% X. I come to you and offer you 160% X. At this price, I can be certain you'll sell. It's a deal of a lifetime. It would be stupid not to. The trick is, as a PE firm, I can make this profitable for me all the way to say 250% X. I can just keep repeating that deal with every other person like you in the neighborhood, certain they'll all individually agree. And by the time the neighborhood realizes some critical service or area is now owned by a profit-obsessed faceless corporation, it'll be mostly sold out already. The trick is to target a market segment when you're able to make offers the other side can't refuse. Then you can literally divide and conquer it.
- anthonypasq 3y ago
  well the person CAN very easily refuse if they care about not selling out to some faceless corporation and fucking their customers, but obviously most of these people dont care about that, so again, seems like you should be getting mad at them. i just dont understand exactly what is the problem here. do you think people shouldnt be able to sell their businesses for what they are worth?
  - TeMPOraL 3y ago
    > well the person CAN very easily refuse if they care about not selling out to some faceless corporation and fucking their customers, but obviously most of these people dont care about that Those people aren't spherical cows in an toy ethics thought experiment. They are real people, with complex lives and many things competing for their care (like e.g. families). They all care about not selling out or hurting their customers... to some degree. Some to larger than others. The simplified algorithm the PE companies are doing is: - Estimate the upper bound of how much most - say, 80% - of the owners of targeted businesses care about things; - Express that upper bound in dollars over the value of business, call that number X; - If you can still make a profit while overpaying by up to X for each bought business, start making offers; otherwise, find a different target. There's little point blaming the business owners, because the transactions are initiated by the PE companies, and they specifically target businesses they know they can get anyway. They're taking advantage of the idea that people should be free to sell their business for a fair price if they want to.
    - anthonypasq 3y ago
      > They're taking advantage of the idea that people should be free to sell their business for a fair price if they want to. this sentence is incoherent. no one is being taken advantage of
      - ben_w 3y ago
        What other word or phrase would describe this situation? Even if you would you prefer "playing the long game", I can see how doing this results in the buyer getting some "advantage" even though at first glance it looks like throwing money away.
        anthonypasq 3y ago
        its a mutually beneficial and agreed upon transaction just like walmart selling me a pen for a price i agree to buy it for. no exploitation of either party is necessary
        ben_w 3y ago
        "Either" implies there are only two parties, the buyer of the business and the seller of the business. The third party, the public who would use the services of the business, is the one being harmed if the buyer of the business also buys all other such businesses in order to create a monopoly. This can also be done with products — not usually pens, but quite commonly with tickets for events. The buyer and the seller of the tickets can be quite happy, but the person who now owns all the tickets is free to tout them for higher prices to the detriment of the general public who would otherwise have bought them directly for less money. This is annoying enough when it's just tickets (I'm told, I never go to the kind of events that touts do this at), but we also saw it with random goods during the pandemic.
        anthonypasq 3y ago
        sorry, i automatically dont take anyone that complains about ticket prices/scalping seriously
edoceo 3y ago
I spoke to the dentist. He was retiring and the offer was very, very good. The PE firms can afford this because they know they will get to squeeze a bunch of consumers for the next 10 years.
- anthonypasq 3y ago
  so what are you bitching about/suggesting should happen? People should not be allowed to sell their businesses for what they are worth?
- ryandrake 3y ago
  Wait a minute, if the dentist was retiring, why would the PE firm buy his practice? There'll be nobody to clean those customers' teeth. Are they just paying a fortune for the office, equipment, and customer list?
  - Spivak 3y ago
    Technically not the last one but broadly speaking yes, you can't transfer the client list when you sell your practice.

Because those deals are targeted "offers you can't refuse", by design. Consider: surely there is a price for which you would be willing to sell me your business, or your house, pretty much on the spot. The current value of your assets could be X. Maybe you're reluctant to sell for anything under 120% X. Maybe you know your neighbors will hate you if you sell it, so you really won't do it for less than 140% X. I come to you and offer you 160% X. At this price, I can be certain you'll sell. It's a deal of a lifetime. It would be stupid not to. The trick is, as a PE firm, I can make this profitable for me all the way to say 250% X. I can just keep repeating that deal with every other person like you in the neighborhood, certain they'll all individually agree. And by the time the neighborhood realizes some critical service or area is now owned by a profit-obsessed faceless corporation, it'll be mostly sold out already. The trick is to target a market segment when you're able to make offers the other side can't refuse. Then you can literally divide and conquer it.

anthonypasq 3y ago
well the person CAN very easily refuse if they care about not selling out to some faceless corporation and fucking their customers, but obviously most of these people dont care about that, so again, seems like you should be getting mad at them. i just dont understand exactly what is the problem here. do you think people shouldnt be able to sell their businesses for what they are worth?
- TeMPOraL 3y ago
  > well the person CAN very easily refuse if they care about not selling out to some faceless corporation and fucking their customers, but obviously most of these people dont care about that Those people aren't spherical cows in an toy ethics thought experiment. They are real people, with complex lives and many things competing for their care (like e.g. families). They all care about not selling out or hurting their customers... to some degree. Some to larger than others. The simplified algorithm the PE companies are doing is: - Estimate the upper bound of how much most - say, 80% - of the owners of targeted businesses care about things; - Express that upper bound in dollars over the value of business, call that number X; - If you can still make a profit while overpaying by up to X for each bought business, start making offers; otherwise, find a different target. There's little point blaming the business owners, because the transactions are initiated by the PE companies, and they specifically target businesses they know they can get anyway. They're taking advantage of the idea that people should be free to sell their business for a fair price if they want to.
  - anthonypasq 3y ago
    > They're taking advantage of the idea that people should be free to sell their business for a fair price if they want to. this sentence is incoherent. no one is being taken advantage of
    - ben_w 3y ago
      What other word or phrase would describe this situation? Even if you would you prefer "playing the long game", I can see how doing this results in the buyer getting some "advantage" even though at first glance it looks like throwing money away.
      - anthonypasq 3y ago
        its a mutually beneficial and agreed upon transaction just like walmart selling me a pen for a price i agree to buy it for. no exploitation of either party is necessary
        ben_w 3y ago
        "Either" implies there are only two parties, the buyer of the business and the seller of the business. The third party, the public who would use the services of the business, is the one being harmed if the buyer of the business also buys all other such businesses in order to create a monopoly. This can also be done with products — not usually pens, but quite commonly with tickets for events. The buyer and the seller of the tickets can be quite happy, but the person who now owns all the tickets is free to tout them for higher prices to the detriment of the general public who would otherwise have bought them directly for less money. This is annoying enough when it's just tickets (I'm told, I never go to the kind of events that touts do this at), but we also saw it with random goods during the pandemic.
        anthonypasq 3y ago
        sorry, i automatically dont take anyone that complains about ticket prices/scalping seriously

edoceo 3y ago

I spoke to the dentist. He was retiring and the offer was very, very good. The PE firms can afford this because they know they will get to squeeze a bunch of consumers for the next 10 years.

anthonypasq 3y ago
so what are you bitching about/suggesting should happen? People should not be allowed to sell their businesses for what they are worth?
ryandrake 3y ago
Wait a minute, if the dentist was retiring, why would the PE firm buy his practice? There'll be nobody to clean those customers' teeth. Are they just paying a fortune for the office, equipment, and customer list?
- Spivak 3y ago
  Technically not the last one but broadly speaking yes, you can't transfer the client list when you sell your practice.