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I have a question someone can hopefully help me answer. I've heard this narrative for many years now - private equity buys a company and drives it to shit. Rece

I have a question someone can hopefully help me answer. I've heard this narrative for many years now - private equity buys a company and drives it to shit. Recently it was PE firms buying all the vets in an area. If that's indeed the case, wouldn't it make sense to hold out because eventually you'll get all the customers? Like, if there are 10 vet offices in the county, and PE firms buy 8 of them, over time won't everyone end up flocking to the 2 that held out?

nunez 1y ago
PE-owned vet clinics are cheaper due to economies of scale, and that's all that matters for most people.
devmor 1y ago
This doesn’t happen as often for the same reason that startups would rather flare out than build a sustainable business: greed. Most people would rather get rich quickly by selling out, instead of putting in effort to get rewarded far in the future.
- actionfromafar 1y ago
  Yes... that's one way of putting it, but I liked the sibling comments more. Another perspective on the same thing. The upshot of holding out isn't very great and may in fact get worse if MegaPetCo buys all your suppliers. It can be not so much greed as running for higher ground when the MegaPetCo tsunami comes to town.
newsclues 1y ago
Vertical orientation, so the hold outs still need to source per meds and foods and supplies from somewhere? Mega pet co owns the whole stack.
- loloquwowndueo 1y ago
  Is it perhaps integration instead of orientation?
locopati 1y ago
those 2 can only handle so many people... the rest are going to be screwed over by the PE companies
coolestguy 1y ago
Theoretically, if those two firms are good at their jobs & also good at marketing (including referrals), then yes sure. Realistically, 75% of professionals aren't worth their salt & so many people will just continue going to the PE firm controlled places since switching won't get them any better service & the 2 hold out firms in this scenario would pragmatically raise their prices.
- cgriswald 1y ago
  > since switching won't get them any better service It will, but as you note it will cost more. As someone who has extensive experience with many vets due to rescuing and fostering with multiple orgs and having animals of my own, I'll take the local firms any day of the week. Although there are some bad ones, and although it can be hard to get your foot in the door, local vets as a whole offer better availability, a more timely experience, a lack of upselling, someone at the front desk, and generally more competent vets. Experiences I've had with the other places make it very clear they're paying their vets bottom dollar, want to extract every one of my dollars possible, don't care how much of my time they waste doing it. Strangely, although they always want me to review my experiences, they never seem to take the criticism to heart.
jjk166 1y ago
The market can stay irrational longer than you can remain solvent. Yes eventually customers will go to better firms who will beat out the short sighted competition, but that could take years and there's no guarantee your firm will survive to see that day. A risk free lump of cash in hand right now is tough to pass up. Even if you are personally willing to take the risk, other stakeholders like stockowners, partners, or key employees may not. Indeed seizing the disgruntled customers after they become fed up doesn't actually require you to remain in business during the dark times - you could start a new firm with a clean slate, optimized for the situation that exists then with a war chest filled by the very PE firms that demonstrated to your customers how valuable you really are.
- sokoloff 1y ago
  I doubt a PE buyout would allow the principal to compete within an X mile radius for Y years post-sale. (PE firms may be a lot of things, but utter idiots is not one of them.)
  - throwaway48476 1y ago
    A principal yes, but the deputy could always take the rest of the staff with them. Principals usually sell for retirement reasons anyways.
    - sokoloff 1y ago
      Sure, but my loyalty to our vet is to the main vet, not his deputy or staff. Those people may or may not be great, but they’ve got no (or very little) automatic transference of loyalty from the original vet.
  - jjk166 1y ago
    Well if Y years is less than the expected time for PE firms to lose their customers, then it's a non issue. If Y is longer, then the PE firm is overpaying for their acquisition and will presumably be acquired and gutted by a more efficient PE firm.
pessimizer 1y ago
The eight (owned by some group that owns 800) can undercut the two on price until they go out of business. The eight could refuse to deal with suppliers that deal with the two. The eight can exclusively license products and procedures within the area, which the two would not be allowed to sell. The eight could pour a lot of money into local advertising, and start rumors about the other two to be picked up in the papers. The eight could award itself certifications and awards that are denied to the two, because the 800 represent a lot of pressure in the industry. Or they could play dirty tricks. I think the previous is what they would be expected to do, and if you were an investor you might be able to sue them if they didn't.
- Wowfunhappy 1y ago
  All of these practices ought to be considered illegal anticompetitive behavior.
  - acdha 1y ago
    They are, but it takes time to get enforcement – and that's assuming that the PE firms don't do something like buy enough $TRUMP to get a private audience with the regulator's boss. If those two firms don't have enough assets to survive through years of legal actions, they're going out of business even if the other practices follow them. Even if the PE vultures give up, it can sour areas for a while: they start a price war and force everyone to lower prices, slash staffing, etc. If they give up after a couple of years when it turns out to be harder to corner the market than they thought, the surviving businesses are still in a worse shape and have the unenviable task of trying to restore prices / service to previous levels.
    - Wowfunhappy 1y ago
      Right, so the government needs to do its job and enforce the law adequately!
      - DangitBobby 1y ago
throwaway48476 1y ago
It's an information asymmetry problem. If people knew which business were PE owned they would avoid them. This problem often happens when the cost of services is charged after delivery.
- gist 1y ago
  > If people knew which business were PE owned they would avoid them. What? You think the average customer knows or cares about that?
  - supportengineer 1y ago
    You two just identified a market opportunity
    - vkou 1y ago
      What market opportunity? If the allegedly poor quality of service isn't enough to drive customers away, why would the customers give a fig about its ownership structure? The customer cares about the taxi, not the checkers.
      - throwaway48476 1y ago
        The problem is the poor service is delivered before the bad pricing. Stifles the corrective market competition pressure.
        vkou 1y ago
        That theory is correct for people whom you get the choice to interact with once or twice with in your life, like realtors and funeral home directors or picking your thesis advisor, but really falls apart for anyone who has a regular customer base of people who come back for repeat service. If my dentist starts charging me double and starts treating me like shit, I really couldn't care less about the practice's ownership structure, or how clean and well-structured, and unit-tested the code that runs on his computer is, If I have a choice, I'll look somewhere else. If I don't have a choice, I'll bitch, but keep going to him. At no point will I care whether or not the office is PE-owned. It's utterly irrelevant to me.
gerdesj 1y ago
"private equity buys a company and drives it to shit." Allow me to introduce you to VMware. It was bought out by Broadcom. That sounds like a tech firm buying a tech firm. It isn't really. Broadcom is (not really) run by Robert Redford from the film "Pretty Woman", except this asset stripping exercise is rather more unpleasant than even his efforts. VMware used to have a flourishing eco system. It managed to largely throw off plagiarism threats from when it was ESX vs ESXi. It was basically Linux (Redhat) with knobs on and fuck you freetards but here's a freebie version that we have cobbled together. Anyway. I was a VMware fanboi for roughly 25 years and now I am not. I was also a Windows (MS) fanboi too for some decades. Can't be arsed these days but I will. Dealing with Windows and VMware is really unpleasant these days.
- supportengineer 1y ago
  Meanwhile, Linux just keeps getting better.
  - gerdesj 1y ago
    I have been developing a Linux desktop using "off the shelf" (Kubuntu) for "enterprise" use, for some years now. By the word enterprise I actually mean "I've called your bluff"! In the "enterprise" world you need to do Secure Boot, AV, and encrypted at rest. Debian and Ubuntu int al can do SB. The tricky one for Linux is AV. I deploy ESET, which only supports Debian/Mint/Ubuntu. AD (LDAP n Kerberos) for auth via Winbind or SSSD etc is an easy given but the equivalent of drive mapping is a bit harder. Especially when VPNs are in use. Windows will keep on trying but the Unix/Linux mounting thing isn't quite so ... forgiving. Neither are perfect but I have no idea on how to even start on a discussion about something that might be called ephemeral mounts.
    - yjftsjthsd-h 1y ago
      > Windows will keep on trying but the Unix/Linux mounting thing isn't quite so ... forgiving. Neither are perfect but I have no idea on how to even start on a discussion about something that might be called ephemeral mounts. Can you make it systemd's problem by making a mount unit that explicitly depends on the VPN service? Or maybe you want something like autofs?
bickfordb 1y ago
In my experience in my city [Portland, OR, US], PE owns most of the large clinics (NW VCA, BluePearl, Banfield). There are still a lot of smaller vets, but it's harder to get an appointment with them and most don't do urgent care/24hr emergency or have an app where you can do scheduling. - In an emergency/urgent care situation, you can't really do a price comparison/shop - The pricing is opaque until they you receive the service. Even in routine/non-emergency situations, you get a quote for the services often 20-30 minutes into your appointment, even for annual exams, so it's pretty obnoxious to switch services at that point. - FWIU, Banfield and BluePearl both have a strategy where have lower cost exams to get patients in the door, but then make that up in super high testing/drug fees, e.g. a $300 UTI test that labs charge $30-100 and 10x upcharges on antibiotics readily available from Chewy/neighborhood pharmacies.

nunez 1y ago

PE-owned vet clinics are cheaper due to economies of scale, and that's all that matters for most people.

devmor 1y ago

This doesn’t happen as often for the same reason that startups would rather flare out than build a sustainable business: greed. Most people would rather get rich quickly by selling out, instead of putting in effort to get rewarded far in the future.

actionfromafar 1y ago
Yes... that's one way of putting it, but I liked the sibling comments more. Another perspective on the same thing. The upshot of holding out isn't very great and may in fact get worse if MegaPetCo buys all your suppliers. It can be not so much greed as running for higher ground when the MegaPetCo tsunami comes to town.

newsclues 1y ago

Vertical orientation, so the hold outs still need to source per meds and foods and supplies from somewhere? Mega pet co owns the whole stack.

loloquwowndueo 1y ago
Is it perhaps integration instead of orientation?

locopati 1y ago

those 2 can only handle so many people... the rest are going to be screwed over by the PE companies

coolestguy 1y ago

Theoretically, if those two firms are good at their jobs & also good at marketing (including referrals), then yes sure. Realistically, 75% of professionals aren't worth their salt & so many people will just continue going to the PE firm controlled places since switching won't get them any better service & the 2 hold out firms in this scenario would pragmatically raise their prices.

cgriswald 1y ago
> since switching won't get them any better service It will, but as you note it will cost more. As someone who has extensive experience with many vets due to rescuing and fostering with multiple orgs and having animals of my own, I'll take the local firms any day of the week. Although there are some bad ones, and although it can be hard to get your foot in the door, local vets as a whole offer better availability, a more timely experience, a lack of upselling, someone at the front desk, and generally more competent vets. Experiences I've had with the other places make it very clear they're paying their vets bottom dollar, want to extract every one of my dollars possible, don't care how much of my time they waste doing it. Strangely, although they always want me to review my experiences, they never seem to take the criticism to heart.

jjk166 1y ago

The market can stay irrational longer than you can remain solvent. Yes eventually customers will go to better firms who will beat out the short sighted competition, but that could take years and there's no guarantee your firm will survive to see that day. A risk free lump of cash in hand right now is tough to pass up. Even if you are personally willing to take the risk, other stakeholders like stockowners, partners, or key employees may not. Indeed seizing the disgruntled customers after they become fed up doesn't actually require you to remain in business during the dark times - you could start a new firm with a clean slate, optimized for the situation that exists then with a war chest filled by the very PE firms that demonstrated to your customers how valuable you really are.

sokoloff 1y ago
I doubt a PE buyout would allow the principal to compete within an X mile radius for Y years post-sale. (PE firms may be a lot of things, but utter idiots is not one of them.)
- throwaway48476 1y ago
  A principal yes, but the deputy could always take the rest of the staff with them. Principals usually sell for retirement reasons anyways.
  - sokoloff 1y ago
    Sure, but my loyalty to our vet is to the main vet, not his deputy or staff. Those people may or may not be great, but they’ve got no (or very little) automatic transference of loyalty from the original vet.
- jjk166 1y ago
  Well if Y years is less than the expected time for PE firms to lose their customers, then it's a non issue. If Y is longer, then the PE firm is overpaying for their acquisition and will presumably be acquired and gutted by a more efficient PE firm.

pessimizer 1y ago

The eight (owned by some group that owns 800) can undercut the two on price until they go out of business. The eight could refuse to deal with suppliers that deal with the two. The eight can exclusively license products and procedures within the area, which the two would not be allowed to sell. The eight could pour a lot of money into local advertising, and start rumors about the other two to be picked up in the papers. The eight could award itself certifications and awards that are denied to the two, because the 800 represent a lot of pressure in the industry. Or they could play dirty tricks. I think the previous is what they would be expected to do, and if you were an investor you might be able to sue them if they didn't.

Wowfunhappy 1y ago
All of these practices ought to be considered illegal anticompetitive behavior.
- acdha 1y ago
  They are, but it takes time to get enforcement – and that's assuming that the PE firms don't do something like buy enough $TRUMP to get a private audience with the regulator's boss. If those two firms don't have enough assets to survive through years of legal actions, they're going out of business even if the other practices follow them. Even if the PE vultures give up, it can sour areas for a while: they start a price war and force everyone to lower prices, slash staffing, etc. If they give up after a couple of years when it turns out to be harder to corner the market than they thought, the surviving businesses are still in a worse shape and have the unenviable task of trying to restore prices / service to previous levels.
  - Wowfunhappy 1y ago
    Right, so the government needs to do its job and enforce the law adequately!
    - DangitBobby 1y ago

throwaway48476 1y ago

It's an information asymmetry problem. If people knew which business were PE owned they would avoid them. This problem often happens when the cost of services is charged after delivery.

gist 1y ago
> If people knew which business were PE owned they would avoid them. What? You think the average customer knows or cares about that?
- supportengineer 1y ago
  You two just identified a market opportunity
  - vkou 1y ago
    What market opportunity? If the allegedly poor quality of service isn't enough to drive customers away, why would the customers give a fig about its ownership structure? The customer cares about the taxi, not the checkers.
    - throwaway48476 1y ago
      The problem is the poor service is delivered before the bad pricing. Stifles the corrective market competition pressure.
      - vkou 1y ago
        That theory is correct for people whom you get the choice to interact with once or twice with in your life, like realtors and funeral home directors or picking your thesis advisor, but really falls apart for anyone who has a regular customer base of people who come back for repeat service. If my dentist starts charging me double and starts treating me like shit, I really couldn't care less about the practice's ownership structure, or how clean and well-structured, and unit-tested the code that runs on his computer is, If I have a choice, I'll look somewhere else. If I don't have a choice, I'll bitch, but keep going to him. At no point will I care whether or not the office is PE-owned. It's utterly irrelevant to me.

gerdesj 1y ago

"private equity buys a company and drives it to shit." Allow me to introduce you to VMware. It was bought out by Broadcom. That sounds like a tech firm buying a tech firm. It isn't really. Broadcom is (not really) run by Robert Redford from the film "Pretty Woman", except this asset stripping exercise is rather more unpleasant than even his efforts. VMware used to have a flourishing eco system. It managed to largely throw off plagiarism threats from when it was ESX vs ESXi. It was basically Linux (Redhat) with knobs on and fuck you freetards but here's a freebie version that we have cobbled together. Anyway. I was a VMware fanboi for roughly 25 years and now I am not. I was also a Windows (MS) fanboi too for some decades. Can't be arsed these days but I will. Dealing with Windows and VMware is really unpleasant these days.

supportengineer 1y ago
Meanwhile, Linux just keeps getting better.
- gerdesj 1y ago
  I have been developing a Linux desktop using "off the shelf" (Kubuntu) for "enterprise" use, for some years now. By the word enterprise I actually mean "I've called your bluff"! In the "enterprise" world you need to do Secure Boot, AV, and encrypted at rest. Debian and Ubuntu int al can do SB. The tricky one for Linux is AV. I deploy ESET, which only supports Debian/Mint/Ubuntu. AD (LDAP n Kerberos) for auth via Winbind or SSSD etc is an easy given but the equivalent of drive mapping is a bit harder. Especially when VPNs are in use. Windows will keep on trying but the Unix/Linux mounting thing isn't quite so ... forgiving. Neither are perfect but I have no idea on how to even start on a discussion about something that might be called ephemeral mounts.
  - yjftsjthsd-h 1y ago
    > Windows will keep on trying but the Unix/Linux mounting thing isn't quite so ... forgiving. Neither are perfect but I have no idea on how to even start on a discussion about something that might be called ephemeral mounts. Can you make it systemd's problem by making a mount unit that explicitly depends on the VPN service? Or maybe you want something like autofs?

bickfordb 1y ago

In my experience in my city [Portland, OR, US], PE owns most of the large clinics (NW VCA, BluePearl, Banfield). There are still a lot of smaller vets, but it's harder to get an appointment with them and most don't do urgent care/24hr emergency or have an app where you can do scheduling. - In an emergency/urgent care situation, you can't really do a price comparison/shop - The pricing is opaque until they you receive the service. Even in routine/non-emergency situations, you get a quote for the services often 20-30 minutes into your appointment, even for annual exams, so it's pretty obnoxious to switch services at that point. - FWIU, Banfield and BluePearl both have a strategy where have lower cost exams to get patients in the door, but then make that up in super high testing/drug fees, e.g. a $300 UTI test that labs charge $30-100 and 10x upcharges on antibiotics readily available from Chewy/neighborhood pharmacies.