4 ms·

I'm not sure why private equity is singled out here, when every time a public company does a bad (eg. Boeing), people crow about how public companies only care

by gruez 11mo ago

I'm not sure why private equity is singled out here, when every time a public company does a bad (eg. Boeing), people crow about how public companies only care about juicing next quarter's earnings.

venturecruelty 11mo ago
Galaxy brain: both are bad, although at least a public company is, ostensibly, trying to make a good or provide a service (lol).
- gruez 11mo ago
  >although at least a public company is, ostensibly, trying to make a good or provide a service (lol). /s?
  - venturecruelty 11mo ago
    No? Companies aren't about making things anymore, they're about stock buybacks and making as much money as possible while doing as little as possible (or selling our data). That's why the refrigerators have ads and break after two years. At least private equity is more honest about being vulchers, whereas Kohler is going to look you dead in the eyes and try to convince you you need a toilet with a camera in it. What a joke.
    - gruez 11mo ago
      >At least private equity is more honest about being vulchers, Again, what's the basis of this? Half the people in this thread seem to take it for granted that PE is somehow "worse" than public companies, but can't seem to articulate why. The only legal difference between public companies and "private equity" is that the former has stricter reporting requirements and can be bought by non-accredited investors. There's nothing about "ostensibly, trying to make a good or provide a service" or whatever.
      - edoceo 11mo ago
        PE does this wealth extraction trick which breeds the ill-will. Eg: purchase a few mom&pop veterinarian business in some area. Squeeze the service rates, trim hours, reduce staff, add some debt. The PE investor gets cash out - the business is destroyed and the community loses a (critical? valuable?) service. It's a common pattern. But not all PE is like this. Like "not all men" and "not all guns" - but enough that the pattern is easily associated - and disliked by many w/o the power to keep them out.
CPLX 11mo ago
Private equity is far worse. It means 100% ownership by a group of sociopaths who are executing on a plan to extract as much cash as possible quickly with no other goals at all. At least public companies have some diversity in ownership and agenda.
- gruez 11mo ago
  >Private equity is far worse. It’s mean 100% ownership by a group of sociopaths who are executing on a plan to extract as much cash as possible quickly with no other goals at all. ...as opposed to the average public company? An average company might have more "average joe" shareholders (almost by definition, because private equity is typically off limits to non-accredited investors), but outside of meme stocks, there's not enough of them to make a difference. The rest of the shareholders (eg. pension funds, insurance companies, endowments, family offices) can be assumed to behave like ruthless capitalists chasing the highest returns, regardless of whether the company is public or not.
  - ksenzee 11mo ago
    If you’ve ever spoken to employees of a public company that was sold to private equity, you’ll know how much of a difference there is. It is a significant difference.
  - CPLX 11mo ago
    > The rest of the shareholders (eg. pension funds, insurance companies, endowments, family offices) can be assumed to behave like ruthless capitalists chasing the highest returns, regardless of whether the company is public or not. Right but they are seeking the highest returns as equity holders typically, usually through things like stock buybacks. Private equity firms have much more devious ways of looting the companies, like management fees, acquiring other portfolio companies, and various other tricks. If you’ve ever seen the Goodfellas scene where they bust out the nightclub, that’s quite literally their business model.
    - gruez 11mo ago
      >Private equity firms have much more devious ways of looting the companies, like management fees, acquiring other portfolio companies, and various other tricks. "looting the companies" is non-nonsensical when they also own it. It's like saying a scrap yard is "looting" the cars it bought by taking out the valuable parts to resell or whatever. The rest of the stuff might make sense in the context of the LPs getting screwed over, but not in the context of portfolio companies that they own.
darth_avocado 11mo ago
The big difference is the extent to which PE will go to juice the quarters earnings. Public companies cannot and will not just fire all staff, fleece customers to the point they won’t return and take on debt that they have no intention of paying back. PE will do all of the above and more if it means they get their money. Which means, you as a customer get screwed over more when PE is involved.
- gruez 11mo ago
  >Public companies cannot and will not just fire all staff, fleece customers to the point they won’t return and take on debt that they have no intention of paying back. Why? Is there some code of conduct for public companies but not private ones?
  - darth_avocado 11mo ago
    > Is there some code of conduct for public companies but not private ones? No but there’s a difference between private companies and PE owned companies. PE model is very different from regular private companies, and it often involves extracting maximum profits at the expense of the company itself. And as far as public companies go, shareholders will have to say something about the operation of the company if you start intentionally sinking it.
    - nazcan 11mo ago
      But doesn't extracting maximum profits at the expense of the company itself mean front loading profits - i.e. long-term worse outcomes? How does a PE company make money from that - unless who they sell it to is not saavu enough to realize it?
      - mvc 11mo ago
        If they sell all the assets owned by the company, they don't need to sell the company itself. They just need to find another one to strip.
    - 11mo ago
mxfh 11mo ago
To me PE is just secondary effect of incentivizing private pension schemes over pay-as-you-go schemes in the last half century to me. A huge wealth transfer in disguise providing capital to financial actors (not at last PE) that are usually not aligned with goals of regular employess: affordable housing and healtcare and reasonably safe jobs. As Germany is on it's way to dismantle it's core of it's pay-as-you-go mandatory state pension insurance and shift towards private, and privat-by-proxy schemes via company pension plans. Europe might be also going that way some time in the near future, but without the comparably healthy demographics of the US. https://en.wikipedia.org/wiki/Revenue_Act_of_1978 https://en.wikipedia.org/wiki/Revenue_Act_of_1978 Funny that all those charts eventually go back to Carter allowing for 401k not, Reagan, though that reuse only happened later. My bigger hunch here is supplying the capital markets with that much additional money was a mistake, that ultimately lead to the current guilded age and accelarated existing trends of in the productivity–pay gap, social stratification and wealth inequality, if not solely being responsible for it. It seems outright impossible for most to compete with a economic reality where the accrued value of like a third of your and everyone else's paycheck is actively working against your net quality of living, when you're not in the top 1 to 10% where the capital gains are a still a net positive over the increased cost of housing and wage stagflation etc.
etempleton 11mo ago
I think generally it is a complaint against the soullessness of corporatism versus ownership that actually cares about delivering a good product and treating their customers and employees right. Greed is very high right now. And you can see that in the behavior of all types of companies. Historically when greed is high like this you eventually end up with a Lehman Bros or Enron situation that causes a painful market place correction.

by gruez 11mo ago

I'm not sure why private equity is singled out here, when every time a public company does a bad (eg. Boeing), people crow about how public companies only care about juicing next quarter's earnings.

venturecruelty 11mo ago

Galaxy brain: both are bad, although at least a public company is, ostensibly, trying to make a good or provide a service (lol).

gruez 11mo ago
>although at least a public company is, ostensibly, trying to make a good or provide a service (lol). /s?
- venturecruelty 11mo ago
  No? Companies aren't about making things anymore, they're about stock buybacks and making as much money as possible while doing as little as possible (or selling our data). That's why the refrigerators have ads and break after two years. At least private equity is more honest about being vulchers, whereas Kohler is going to look you dead in the eyes and try to convince you you need a toilet with a camera in it. What a joke.
  - gruez 11mo ago
    >At least private equity is more honest about being vulchers, Again, what's the basis of this? Half the people in this thread seem to take it for granted that PE is somehow "worse" than public companies, but can't seem to articulate why. The only legal difference between public companies and "private equity" is that the former has stricter reporting requirements and can be bought by non-accredited investors. There's nothing about "ostensibly, trying to make a good or provide a service" or whatever.
    - edoceo 11mo ago
      PE does this wealth extraction trick which breeds the ill-will. Eg: purchase a few mom&pop veterinarian business in some area. Squeeze the service rates, trim hours, reduce staff, add some debt. The PE investor gets cash out - the business is destroyed and the community loses a (critical? valuable?) service. It's a common pattern. But not all PE is like this. Like "not all men" and "not all guns" - but enough that the pattern is easily associated - and disliked by many w/o the power to keep them out.

CPLX 11mo ago

Private equity is far worse. It means 100% ownership by a group of sociopaths who are executing on a plan to extract as much cash as possible quickly with no other goals at all. At least public companies have some diversity in ownership and agenda.

gruez 11mo ago
>Private equity is far worse. It’s mean 100% ownership by a group of sociopaths who are executing on a plan to extract as much cash as possible quickly with no other goals at all. ...as opposed to the average public company? An average company might have more "average joe" shareholders (almost by definition, because private equity is typically off limits to non-accredited investors), but outside of meme stocks, there's not enough of them to make a difference. The rest of the shareholders (eg. pension funds, insurance companies, endowments, family offices) can be assumed to behave like ruthless capitalists chasing the highest returns, regardless of whether the company is public or not.
- ksenzee 11mo ago
  If you’ve ever spoken to employees of a public company that was sold to private equity, you’ll know how much of a difference there is. It is a significant difference.
- CPLX 11mo ago
  > The rest of the shareholders (eg. pension funds, insurance companies, endowments, family offices) can be assumed to behave like ruthless capitalists chasing the highest returns, regardless of whether the company is public or not. Right but they are seeking the highest returns as equity holders typically, usually through things like stock buybacks. Private equity firms have much more devious ways of looting the companies, like management fees, acquiring other portfolio companies, and various other tricks. If you’ve ever seen the Goodfellas scene where they bust out the nightclub, that’s quite literally their business model.
  - gruez 11mo ago
    >Private equity firms have much more devious ways of looting the companies, like management fees, acquiring other portfolio companies, and various other tricks. "looting the companies" is non-nonsensical when they also own it. It's like saying a scrap yard is "looting" the cars it bought by taking out the valuable parts to resell or whatever. The rest of the stuff might make sense in the context of the LPs getting screwed over, but not in the context of portfolio companies that they own.

darth_avocado 11mo ago

The big difference is the extent to which PE will go to juice the quarters earnings. Public companies cannot and will not just fire all staff, fleece customers to the point they won’t return and take on debt that they have no intention of paying back. PE will do all of the above and more if it means they get their money. Which means, you as a customer get screwed over more when PE is involved.

gruez 11mo ago
>Public companies cannot and will not just fire all staff, fleece customers to the point they won’t return and take on debt that they have no intention of paying back. Why? Is there some code of conduct for public companies but not private ones?
- darth_avocado 11mo ago
  > Is there some code of conduct for public companies but not private ones? No but there’s a difference between private companies and PE owned companies. PE model is very different from regular private companies, and it often involves extracting maximum profits at the expense of the company itself. And as far as public companies go, shareholders will have to say something about the operation of the company if you start intentionally sinking it.
  - nazcan 11mo ago
    But doesn't extracting maximum profits at the expense of the company itself mean front loading profits - i.e. long-term worse outcomes? How does a PE company make money from that - unless who they sell it to is not saavu enough to realize it?
    - mvc 11mo ago
      If they sell all the assets owned by the company, they don't need to sell the company itself. They just need to find another one to strip.
  - 11mo ago

mxfh 11mo ago

To me PE is just secondary effect of incentivizing private pension schemes over pay-as-you-go schemes in the last half century to me. A huge wealth transfer in disguise providing capital to financial actors (not at last PE) that are usually not aligned with goals of regular employess: affordable housing and healtcare and reasonably safe jobs. As Germany is on it's way to dismantle it's core of it's pay-as-you-go mandatory state pension insurance and shift towards private, and privat-by-proxy schemes via company pension plans. Europe might be also going that way some time in the near future, but without the comparably healthy demographics of the US. https://en.wikipedia.org/wiki/Revenue_Act_of_1978 https://en.wikipedia.org/wiki/Revenue_Act_of_1978 Funny that all those charts eventually go back to Carter allowing for 401k not, Reagan, though that reuse only happened later. My bigger hunch here is supplying the capital markets with that much additional money was a mistake, that ultimately lead to the current guilded age and accelarated existing trends of in the productivity–pay gap, social stratification and wealth inequality, if not solely being responsible for it. It seems outright impossible for most to compete with a economic reality where the accrued value of like a third of your and everyone else's paycheck is actively working against your net quality of living, when you're not in the top 1 to 10% where the capital gains are a still a net positive over the increased cost of housing and wage stagflation etc.

etempleton 11mo ago

I think generally it is a complaint against the soullessness of corporatism versus ownership that actually cares about delivering a good product and treating their customers and employees right. Greed is very high right now. And you can see that in the behavior of all types of companies. Historically when greed is high like this you eventually end up with a Lehman Bros or Enron situation that causes a painful market place correction.