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Serious question: is there a single example where the customer experience has improved after private equity took over?

by mv4 1y ago

deleted 1y ago
[deleted]
Vosporos 1y ago
Yes, when the customer also happens to be the equity manager, so the customer coincidentally gets a big stack of cash. ;-)
Aunche 1y ago
Usually when a company sells to private equity, it is because the business is suffering from financial hardship or the current owner is unable to continue to run the business and cannot find a successor, so selling to private equity would be the least bad option.
- thfuran 1y ago
  I'm not sure that simply stopping business is categorically worse than selling to a malevolent entity instead.
  - crazygringo 1y ago
    Closing down the only nearby hospital is generally considered worse. This is about providing life-saving care, not Toys R Us.
    - thfuran 1y ago
      As a first order approximation, closing down a nearby hospital and sending patients to one further away is only worse than PE if PE doesn't worsen care to such an extent that more people die there than would've en route to the other one. And most companies aren't about lifegiving care anyways.
      - crazygringo 1y ago
        Well yes, that's the whole point of ambulances and such. More people will die because minutes matter. And this whole topic is specifically about companies in the business of livegiving care. Hospital ER's.
      - welcome_dragon 1y ago
        The commenter spoke specifically about the lone hospital in an area. e.g. rural areas Hospitals in those areas tend to not offer as high quality of care as most urban/suburban hospital. When the only hospital in an area closes, it's not just a matter of going slightly farther out for care. In many cases, it's just not possible for people. This is a big issue with the idea of socialized health care as it could happen in America. Right now we already have a two (or three) tiered healthcare system: one for the "rich" meaning urban and suburban and one for the "poor, remote, and/or rural". When people talk about socialized health care they rarely if ever talk about how to keep such a system from getting worse. So when a rural hospital closes down, you can expect a higher death rate in the local population. Not to mention the economic impact of losing what is probably the highest paying employer around and all the fallout that comes from that.
- deleted 1y ago
  [deleted]
- kjkjadksj 1y ago
  Or they merely want no job and a huge pile of money. That is super common too.
- mbesto 1y ago
  This is so untrue I don't even know where to start... Source - have sold my business to PE and have advised on 900+ companies who have sold to PE firms.
  - ascendantlogic 1y ago
    > I don't even know where to start... Literally anywhere is better than just hand waving the parent statement away with nebulous, unverifiable claims of your own experience.
    - mbesto 1y ago
      Here is a few examples of PE shops and their list of portfolio companies. Please name all of the companies that fit the criteria of "the business is suffering from financial hardship or the current owner is unable to continue to run the business and cannot find a successor" https://www.ta.com/portfolio/investments/ https://www.ta.com/portfolio/investments/ https://www.accel-kkr.com/portfolio/ https://www.accel-kkr.com/portfolio/ https://frontiergrowth.com/our-partnerships https://frontiergrowth.com/our-partnerships
  - Aunche 1y ago
    In common parlance, "private equity acquisitions" refer to B2C companies rather than B2B companies where there was never of stigma of financialization to begin with. It's possible you're right as I'm also speaking based off vibes, but my argument remains the same. Those who sell out for a quick payout would eventually fall into the category of "the current owner is unable to continue to run the business and cannot find a successor" when they hit retirement age and their kids would prefer easier/safer/higher general market returns.
    - mbesto 1y ago
      I'm not at the retirement age and I was able to continue to run the business, yet sold to PE. How do you explain this? Also, see my comment below. Feel free to list out all of the companies from those portfolios that match your criteria. I'll wait patiently.
- vjvjvjvjghv 1y ago
  That is often not true. My former dentist had a nice family practice that made very good money. Then a PE company came in and offered a ton of money which was an offer he couldn’t resist. The PE slowly took over more and more small practices in the area until they had a significant market share which allowed them to raise prices and reduce service. Patients didn’t really have anywhere else to go. I see the same happening with vet practices. The big corps are buying more and more small practices so you basically have almost no other choice than paying higher prices.
  - Aunche 1y ago
    > Then a PE company came in and offered a ton of money which was an offer he couldn’t resist. He is going to retire sooner or later and what then? There is a cultural paradox where it's socially unacceptable to profit too much from a necessary good or service, but you can profit as much as you want from non-necessary goods and services. In the past, this pressured small practices to keep their service standards high and prices relatively low. However, due to the accessibility of information and finance, rather than start your own medical practice, you can become similarly wealthy with half the work just by being employed as a doctor/dentist and investing your money in an ETF. Of course, people with money swoop in to "correct" the mismatch in supply and demand, which leads to worse service and higher prices. The knee jerk reaction people have towards these situations is to "punish greed", but that doesn't change the underlying market forces. Much like rent control, it may work in the short term but makes the problem worse in the long term.
    - thfuran 1y ago
      An act being incentivized doesn't make it good, only more likely to occur. Both the act and the incentives can be opposed.
    - magicalist 1y ago
      You claimed: > Usually when a company sells to private equity, it is because the business is suffering from financial hardship or the current owner is unable to continue to run the business and cannot find a successor, so selling to private equity would be the least bad option. private equity being able to offer more money for your practice when you retire than a dentist who would have continued the small practice is not financial hardship or being unable to find a successor, so please don't pretend your two comments are equivalent. This comment is much more honest: there was room for financialization, so people did it. They were unable to find a successor who would pay more than a group of people that wanted to wring money out of their company. Gives the lie to the "selling to private equity would be the least bad option" conclusion, though.
anon191928 1y ago
yes lastpass is not hacked since PE took over. So something bad product is now ok
mbesto 1y ago
PE gets a bad rap and for very correct reasons (especially at the large cap where financial engineering is rampant). However, there are a ton of examples where PE does add value and the customer experience improves. However it's impossible for me to list them because your definition of customer experience improvement might be very different than mine. So this point is generally very moot unless we can all agree on a standard quality metric for "customer experience".
- deleted 1y ago
  [deleted]
- vjvjvjvjghv 1y ago
  Go ahead and give some examples according to your personal metric for customer experience.
- bbkane 1y ago
  Can you list some anyway? I'm curious about your perspective
  - mbesto 1y ago
    Apax Partners rolled this companies together: https://www.authoritybrands.com/about-us/ https://www.authoritybrands.com/about-us/ I use ASP for my pool cleaning and they referred me to their electric company (Mr Sparky). Both have been excellent services and I was able to receive a discount on Mr Sparky, because of the existing relationship with one. Seems like a win:win for everyone.
- mv4 1y ago
  Good customer experience is generally associated with receiving good value for the money, and not feeling like you're getting screwed.
  - mbesto 1y ago
    Yes which is the definition of something that is very subjective. What you deem as "good value for the money" may be very different than mine...hence my comment.
someguynamedq 1y ago
It's not a matter of anecdotes. All you have to do is look at what PE is. It's financial engineering done to increase EBITDA for resale. There is nothing in the PE model incentivising improved outcomes for customers.

Serious question: is there a single example where the customer experience has improved after private equity took over?

by mv4 1y ago

Serious question: is there a single example where the customer experience has improved after private equity took over?

deleted 1y ago

[deleted]

Vosporos 1y ago

Yes, when the customer also happens to be the equity manager, so the customer coincidentally gets a big stack of cash. ;-)

Aunche 1y ago

Usually when a company sells to private equity, it is because the business is suffering from financial hardship or the current owner is unable to continue to run the business and cannot find a successor, so selling to private equity would be the least bad option.

thfuran 1y ago
I'm not sure that simply stopping business is categorically worse than selling to a malevolent entity instead.
- crazygringo 1y ago
  Closing down the only nearby hospital is generally considered worse. This is about providing life-saving care, not Toys R Us.
  - thfuran 1y ago
    As a first order approximation, closing down a nearby hospital and sending patients to one further away is only worse than PE if PE doesn't worsen care to such an extent that more people die there than would've en route to the other one. And most companies aren't about lifegiving care anyways.
    - crazygringo 1y ago
      Well yes, that's the whole point of ambulances and such. More people will die because minutes matter. And this whole topic is specifically about companies in the business of livegiving care. Hospital ER's.
    - welcome_dragon 1y ago
      The commenter spoke specifically about the lone hospital in an area. e.g. rural areas Hospitals in those areas tend to not offer as high quality of care as most urban/suburban hospital. When the only hospital in an area closes, it's not just a matter of going slightly farther out for care. In many cases, it's just not possible for people. This is a big issue with the idea of socialized health care as it could happen in America. Right now we already have a two (or three) tiered healthcare system: one for the "rich" meaning urban and suburban and one for the "poor, remote, and/or rural". When people talk about socialized health care they rarely if ever talk about how to keep such a system from getting worse. So when a rural hospital closes down, you can expect a higher death rate in the local population. Not to mention the economic impact of losing what is probably the highest paying employer around and all the fallout that comes from that.
deleted 1y ago
[deleted]
kjkjadksj 1y ago
Or they merely want no job and a huge pile of money. That is super common too.
mbesto 1y ago
This is so untrue I don't even know where to start... Source - have sold my business to PE and have advised on 900+ companies who have sold to PE firms.
- ascendantlogic 1y ago
  > I don't even know where to start... Literally anywhere is better than just hand waving the parent statement away with nebulous, unverifiable claims of your own experience.
  - mbesto 1y ago
    Here is a few examples of PE shops and their list of portfolio companies. Please name all of the companies that fit the criteria of "the business is suffering from financial hardship or the current owner is unable to continue to run the business and cannot find a successor" https://www.ta.com/portfolio/investments/ https://www.ta.com/portfolio/investments/ https://www.accel-kkr.com/portfolio/ https://www.accel-kkr.com/portfolio/ https://frontiergrowth.com/our-partnerships https://frontiergrowth.com/our-partnerships
- Aunche 1y ago
  In common parlance, "private equity acquisitions" refer to B2C companies rather than B2B companies where there was never of stigma of financialization to begin with. It's possible you're right as I'm also speaking based off vibes, but my argument remains the same. Those who sell out for a quick payout would eventually fall into the category of "the current owner is unable to continue to run the business and cannot find a successor" when they hit retirement age and their kids would prefer easier/safer/higher general market returns.
  - mbesto 1y ago
    I'm not at the retirement age and I was able to continue to run the business, yet sold to PE. How do you explain this? Also, see my comment below. Feel free to list out all of the companies from those portfolios that match your criteria. I'll wait patiently.
vjvjvjvjghv 1y ago
That is often not true. My former dentist had a nice family practice that made very good money. Then a PE company came in and offered a ton of money which was an offer he couldn’t resist. The PE slowly took over more and more small practices in the area until they had a significant market share which allowed them to raise prices and reduce service. Patients didn’t really have anywhere else to go. I see the same happening with vet practices. The big corps are buying more and more small practices so you basically have almost no other choice than paying higher prices.
- Aunche 1y ago
  > Then a PE company came in and offered a ton of money which was an offer he couldn’t resist. He is going to retire sooner or later and what then? There is a cultural paradox where it's socially unacceptable to profit too much from a necessary good or service, but you can profit as much as you want from non-necessary goods and services. In the past, this pressured small practices to keep their service standards high and prices relatively low. However, due to the accessibility of information and finance, rather than start your own medical practice, you can become similarly wealthy with half the work just by being employed as a doctor/dentist and investing your money in an ETF. Of course, people with money swoop in to "correct" the mismatch in supply and demand, which leads to worse service and higher prices. The knee jerk reaction people have towards these situations is to "punish greed", but that doesn't change the underlying market forces. Much like rent control, it may work in the short term but makes the problem worse in the long term.
  - thfuran 1y ago
    An act being incentivized doesn't make it good, only more likely to occur. Both the act and the incentives can be opposed.
  - magicalist 1y ago
    You claimed: > Usually when a company sells to private equity, it is because the business is suffering from financial hardship or the current owner is unable to continue to run the business and cannot find a successor, so selling to private equity would be the least bad option. private equity being able to offer more money for your practice when you retire than a dentist who would have continued the small practice is not financial hardship or being unable to find a successor, so please don't pretend your two comments are equivalent. This comment is much more honest: there was room for financialization, so people did it. They were unable to find a successor who would pay more than a group of people that wanted to wring money out of their company. Gives the lie to the "selling to private equity would be the least bad option" conclusion, though.

anon191928 1y ago

yes lastpass is not hacked since PE took over. So something bad product is now ok

mbesto 1y ago

PE gets a bad rap and for very correct reasons (especially at the large cap where financial engineering is rampant). However, there are a ton of examples where PE does add value and the customer experience improves. However it's impossible for me to list them because your definition of customer experience improvement might be very different than mine. So this point is generally very moot unless we can all agree on a standard quality metric for "customer experience".

deleted 1y ago
[deleted]
vjvjvjvjghv 1y ago
Go ahead and give some examples according to your personal metric for customer experience.
bbkane 1y ago
Can you list some anyway? I'm curious about your perspective
- mbesto 1y ago
  Apax Partners rolled this companies together: https://www.authoritybrands.com/about-us/ https://www.authoritybrands.com/about-us/ I use ASP for my pool cleaning and they referred me to their electric company (Mr Sparky). Both have been excellent services and I was able to receive a discount on Mr Sparky, because of the existing relationship with one. Seems like a win:win for everyone.
mv4 1y ago
Good customer experience is generally associated with receiving good value for the money, and not feeling like you're getting screwed.
- mbesto 1y ago
  Yes which is the definition of something that is very subjective. What you deem as "good value for the money" may be very different than mine...hence my comment.

someguynamedq 1y ago

It's not a matter of anecdotes. All you have to do is look at what PE is. It's financial engineering done to increase EBITDA for resale. There is nothing in the PE model incentivising improved outcomes for customers.