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Private equity hoovers up existing businesses that are mostly well functioning. If they fail, we suffer as those businesses we depend upon fail and disappear.

Private equity hoovers up existing businesses that are mostly well functioning. If they fail, we suffer as those businesses we depend upon fail and disappear. Everything from big national chains to your local doctors office can be destroyed in this way. But if private equity succeeds, we also suffer. Private equity is… private. Normal people have our savings invested in public markets. We can’t easily invest in private equity, and we shouldn’t because it’s too risky. But imagine a world where every strong business goes private and only failing businesses are public. The wealthy take everything private so they don’t have to share the wealth. IMO any business over a certain size should be forced to be public and no option to go private again.

bpt3 1y ago
> Private equity is… private. Normal people have our savings invested in public markets. We can’t easily invest in private equity, and we shouldn’t because it’s too risky. Financial entities you rely on (pension funds, insurance companies, and universities among others) invest, and you may be getting access yourself thanks to Trump! > IMO any business over a certain size should be forced to be public and no option to go private again. What on earth is the rationale for this policy? If you build a successful company, you're required by law to give up control?
- trod1234 1y ago
  I don't think there is a valid rationale for this. Unfortunately, there are a lot of armchair spectators that don't understand how the economy actually functions; and they've got brigades that go after people that do actually know who speak out (based on certain keywords). As a result, its totally not worth talking about since the point of no return has largely already come and gone and we're stuck in a hysteresis trap. People don't see how the things we are seeing today were predictable outcomes given choices made at the money-printer level (i.e. Fed/Private Banking). No deposit requirement, is no reserve money-printing. It always fails, but I'm sure someone will say... but this time will be different. Needless to say, any discussion on economics is basically flame bait these days with a lot of delusional people on both sides of the aisle. Fractional Banking (RIP, Circa 2020).
- vannevar 1y ago
  Your tiny indirect share of the PE firm's profits will not match your direct loss of service as a customer and/or loss of compensation as an employee. Contrary to popular myth, wealth does not trickle down in any meaningful way. In an unregulated capitalist system, wealth flows toward the centers of wealth, just as surely as gravity pulls toward the centers of mass.
bfg_9k 1y ago
> But imagine a world where every strong business goes private and only failing businesses are public. That's the opposite of what happens with PE. PE firms don't buy fairly priced, well run businesses. They (typically) buy underpriced, poorly performing but cash flow heavy businesses that would benefit from leveraging up and making operations more lean. Think about it, if a business is fairly priced and well run, PE firms have no incentive to buy it because where do they generate returns? I don't like PE firms but there's no doubt that they force businesses to operate better, and ultimately that benefits people like you and me who have retirement savings, because PE firms aren't getting their money out of thin air.
- arresin 1y ago
  Do PE hospitals and veterinary clinics perform better?
  - mmh0000 1y ago
    Depends how you define "better" doesn't it? Better ROI: yes! Better Customer Prices: No! Better Business Operations: Yes. Better Customer Experience: No. Better Profit Margins: Yes. Better Care: No. Better Shareholder Returns: Yes. Better Employee Compensation: No.
  - bfg_9k 1y ago
    For the owners? Yeah, they do typically. For the service they provide stakeholders other than the owners? Probably not.
- sa46 1y ago
  > Think about it, if a business is fairly priced and well run, PE firms have no incentive to buy it because where do they generate returns? PE has access to business models unavailable to the original owner. - Buy all local dentist clinics at an enticing markup then increase rates. - Buy businesses and migrate them to tech where the PE firm holds an advantage. For example, a PE firm that runs its own payment gateway. - Buy a business that complements a larger business to reduce churn or increase sales.
toast0 1y ago
> Private equity hoovers up existing businesses that are mostly well functioning. There's many flavors of private equity, but the predatory ones tend to buy businesses that are slowly failing, and turn them into something that hits a brick wall and completely fails. If it was a mostly well functioning business with good prospects, likely the current ownership would be less interested in selling or a sale to similar ownership could be made. Dental clinics owned by a dentist sell to a new dentist all the time. If they're being sold to PE firms, it's because the business of being a dentist is changing and not in a good way. Dental insurance is a hassle and doesn't pay well, finding customers can be hard without accepting insurance, hiring staff is hard (at least in my area), young dentists may not have the capital to buy out retirees, new equipment is expensive but patients like being wowed.
- e40 1y ago
  There are predatory ones that corner the market on something (pet care, dentistry) in an area to jack up prices and make a killing.

bpt3 1y ago

> Private equity is… private. Normal people have our savings invested in public markets. We can’t easily invest in private equity, and we shouldn’t because it’s too risky. Financial entities you rely on (pension funds, insurance companies, and universities among others) invest, and you may be getting access yourself thanks to Trump! > IMO any business over a certain size should be forced to be public and no option to go private again. What on earth is the rationale for this policy? If you build a successful company, you're required by law to give up control?

trod1234 1y ago
I don't think there is a valid rationale for this. Unfortunately, there are a lot of armchair spectators that don't understand how the economy actually functions; and they've got brigades that go after people that do actually know who speak out (based on certain keywords). As a result, its totally not worth talking about since the point of no return has largely already come and gone and we're stuck in a hysteresis trap. People don't see how the things we are seeing today were predictable outcomes given choices made at the money-printer level (i.e. Fed/Private Banking). No deposit requirement, is no reserve money-printing. It always fails, but I'm sure someone will say... but this time will be different. Needless to say, any discussion on economics is basically flame bait these days with a lot of delusional people on both sides of the aisle. Fractional Banking (RIP, Circa 2020).
vannevar 1y ago
Your tiny indirect share of the PE firm's profits will not match your direct loss of service as a customer and/or loss of compensation as an employee. Contrary to popular myth, wealth does not trickle down in any meaningful way. In an unregulated capitalist system, wealth flows toward the centers of wealth, just as surely as gravity pulls toward the centers of mass.

bfg_9k 1y ago

> But imagine a world where every strong business goes private and only failing businesses are public. That's the opposite of what happens with PE. PE firms don't buy fairly priced, well run businesses. They (typically) buy underpriced, poorly performing but cash flow heavy businesses that would benefit from leveraging up and making operations more lean. Think about it, if a business is fairly priced and well run, PE firms have no incentive to buy it because where do they generate returns? I don't like PE firms but there's no doubt that they force businesses to operate better, and ultimately that benefits people like you and me who have retirement savings, because PE firms aren't getting their money out of thin air.

arresin 1y ago
Do PE hospitals and veterinary clinics perform better?
- mmh0000 1y ago
  Depends how you define "better" doesn't it? Better ROI: yes! Better Customer Prices: No! Better Business Operations: Yes. Better Customer Experience: No. Better Profit Margins: Yes. Better Care: No. Better Shareholder Returns: Yes. Better Employee Compensation: No.
- bfg_9k 1y ago
  For the owners? Yeah, they do typically. For the service they provide stakeholders other than the owners? Probably not.
sa46 1y ago
> Think about it, if a business is fairly priced and well run, PE firms have no incentive to buy it because where do they generate returns? PE has access to business models unavailable to the original owner. - Buy all local dentist clinics at an enticing markup then increase rates. - Buy businesses and migrate them to tech where the PE firm holds an advantage. For example, a PE firm that runs its own payment gateway. - Buy a business that complements a larger business to reduce churn or increase sales.

toast0 1y ago

> Private equity hoovers up existing businesses that are mostly well functioning. There's many flavors of private equity, but the predatory ones tend to buy businesses that are slowly failing, and turn them into something that hits a brick wall and completely fails. If it was a mostly well functioning business with good prospects, likely the current ownership would be less interested in selling or a sale to similar ownership could be made. Dental clinics owned by a dentist sell to a new dentist all the time. If they're being sold to PE firms, it's because the business of being a dentist is changing and not in a good way. Dental insurance is a hassle and doesn't pay well, finding customers can be hard without accepting insurance, hiring staff is hard (at least in my area), young dentists may not have the capital to buy out retirees, new equipment is expensive but patients like being wowed.

e40 1y ago
There are predatory ones that corner the market on something (pet care, dentistry) in an area to jack up prices and make a killing.