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Aside, why not link the original video instead of a reddit post? This point about "private equity" being a boogeyman is such a tired take, the vast majority of

Aside, why not link the original video instead of a reddit post? This point about "private equity" being a boogeyman is such a tired take, the vast majority of equity of companies are held privately, and the vulture PE firms do exist but are not as prevalent as people make it seem online. It's a meme that many people seem to have latched on when the vast majority of PE firms and companies work perfectly fine, buying a company, growing it, then selling it for a profit.

teroshan 11mo ago
The Reddit video is actually 3 different clips stitched together, the sources are in the Reddit OP.
bbor 11mo ago
Aside, why not link the original video instead of a reddit post? It's a compilation, but regardless, Reddit seems about as "original" as any other platform. I'd certainly rather see Reddit links here than YouTube links, all else being equal! the vast majority of equity of companies are held privately That's an good intuition, but it turns out to be false globally (TIL!): "There are nearly 25x more PE- and VC-backed companies than public markets [globally], but the total capitalization of private equity and venture capital is just 12% of public equity markets." per https://www.harbourvest.com/insights-news/insights/cpm-how-does-the-size-of-private-markets-compare-to-public-markets/ https://www.harbourvest.com/insights-news/insights/cpm-how-d... vulture PE firms do exist but are not as prevalent as people make it seem online. It's a meme that many people seem to have latched on when the vast majority of PE firms and companies work perfectly fine ...source? It's certainly possible that I'm suffering from confirmation bias, but "company goes through PE acquisition" headlines seem to be followed by "brand dissolved" headlines in way too many cases. Even if it's not a literal majority, the problem seems A) widespread, and B) behind many of the most harmful symptoms of the rot beneath the American(/global?) economy!
- satvikpendem 11mo ago
  My mistake, I should have said vast majority of companies, not equity in companies, are privately held. If you're seeing it in the media, of course it's confirmation bias. Do you think it makes a good headline to say that a firm bought a company, grew it over 5 years, then sold it? Yet that's what happens in the majority of cases. Those in the media are the exceptions that prove the rule.
  - bigbadfeline 11mo ago
    >> "brand dissolved" headlines > If you're seeing it in the media, of course it's confirmation bias. It's a huge mistake to narrow down the problems of private equity firms (PEFs) to the dissolution of the companies they buy. > Do you think it makes a good headline to say that a firm bought a company, grew it over 5 years, then sold it? How is that different from what the video said? They buy all the hardware, grow the price of it by the mere fact of buying it up, hoard it, and then they sell it back to you at even higher prices as cloud services. They make a profit but you are robbed. It's the strategy of scalping which has been going on in the GPU market for quite some time, but now it's used by corporations on an industrial scale. The problem is precisely in the normal operation of PEFs, or rather, in the regulations that allow them to operate that way.
    - satvikpendem 11mo ago
      > It's a huge mistake to narrow down the problems of private equity firms (PEFs) to the dissolution of the companies they buy. I'm not sure I ever said this, certainly there are some problems attributable to their companies but not all. > but now it's used by corporations on an industrial scale. You mean, buying raw goods? It's not "scalping" if a company is buying what they need to integrate into their finished goods. That is to say, they are not buying them with the express purpose of reselling those same items back to you, as is, which is the case with actual scalpers of concert tickets or GPUs for example (and which is the actual definition of scalping, no economist would call this scalping). That's like saying I'm being "scalped" when a construction company buys timber to build into a house. Oh no, I'm being "robbed" of being able to buy my own wood, and the company is increasing the price of the wood by mere fact of buying it up, and then because the house costs more than what I would've paid for the wood.
financetechbro 11mo ago
Did you know that there are more PE firms in the US than there are McDonalds? https://finance.yahoo.com/news/now-more-pe-funds-mcdonald-120000877.html https://finance.yahoo.com/news/now-more-pe-funds-mcdonald-12... So while PE firms are not inherently “vulture” like, I would argue that the increasing number of firms fighting over the same number of assets to squeeze out returns (hopefully) above market returns leads to behavior that can be considered “vulture” like. For context, part of my work is to sell assets to PE firms
- Ekaros 11mo ago
  Is this some sort of shell game? Is there some benefit from artificially creating these firms to hold the assets? As I can't think there is enough demand to fully staff that amount of firms with all the full-time workers it would need.
  - y0eswddl 11mo ago
    Almost certainly some kind of shell game - it seems many major PE companies own each other and smaller ones. I'd actually be very interested to see if anyone ever managed to break down who actually owns what
  - financetechbro 10mo ago
    So most PE firms probably have around 5-15 employees. They don’t require too much manpower unless they’re trying to close a lot of deals. The main tasks are sourcing the asset, conducting diligence, negotiating terms, and supporting the asset post investment. This can all be done with an analyst, an associate, a VP, and a Partner/MD, each focusing on things from networking/relationship building to making financial models and other adhoc work. I think PE just become a very popular way for wall street grads and MBA types to make a decent living without necessarily having to be a good investor (PE funds don’t present their full returns until 10+ after the fund has closed).
- MarkusAllen 10mo ago
  [dead]

teroshan 11mo ago

The Reddit video is actually 3 different clips stitched together, the sources are in the Reddit OP.

bbor 11mo ago

Aside, why not link the original video instead of a reddit post? It's a compilation, but regardless, Reddit seems about as "original" as any other platform. I'd certainly rather see Reddit links here than YouTube links, all else being equal! the vast majority of equity of companies are held privately That's an good intuition, but it turns out to be false globally (TIL!): "There are nearly 25x more PE- and VC-backed companies than public markets [globally], but the total capitalization of private equity and venture capital is just 12% of public equity markets." per https://www.harbourvest.com/insights-news/insights/cpm-how-does-the-size-of-private-markets-compare-to-public-markets/ https://www.harbourvest.com/insights-news/insights/cpm-how-d... vulture PE firms do exist but are not as prevalent as people make it seem online. It's a meme that many people seem to have latched on when the vast majority of PE firms and companies work perfectly fine ...source? It's certainly possible that I'm suffering from confirmation bias, but "company goes through PE acquisition" headlines seem to be followed by "brand dissolved" headlines in way too many cases. Even if it's not a literal majority, the problem seems A) widespread, and B) behind many of the most harmful symptoms of the rot beneath the American(/global?) economy!

satvikpendem 11mo ago
My mistake, I should have said vast majority of companies, not equity in companies, are privately held. If you're seeing it in the media, of course it's confirmation bias. Do you think it makes a good headline to say that a firm bought a company, grew it over 5 years, then sold it? Yet that's what happens in the majority of cases. Those in the media are the exceptions that prove the rule.
- bigbadfeline 11mo ago
  >> "brand dissolved" headlines > If you're seeing it in the media, of course it's confirmation bias. It's a huge mistake to narrow down the problems of private equity firms (PEFs) to the dissolution of the companies they buy. > Do you think it makes a good headline to say that a firm bought a company, grew it over 5 years, then sold it? How is that different from what the video said? They buy all the hardware, grow the price of it by the mere fact of buying it up, hoard it, and then they sell it back to you at even higher prices as cloud services. They make a profit but you are robbed. It's the strategy of scalping which has been going on in the GPU market for quite some time, but now it's used by corporations on an industrial scale. The problem is precisely in the normal operation of PEFs, or rather, in the regulations that allow them to operate that way.
  - satvikpendem 11mo ago
    > It's a huge mistake to narrow down the problems of private equity firms (PEFs) to the dissolution of the companies they buy. I'm not sure I ever said this, certainly there are some problems attributable to their companies but not all. > but now it's used by corporations on an industrial scale. You mean, buying raw goods? It's not "scalping" if a company is buying what they need to integrate into their finished goods. That is to say, they are not buying them with the express purpose of reselling those same items back to you, as is, which is the case with actual scalpers of concert tickets or GPUs for example (and which is the actual definition of scalping, no economist would call this scalping). That's like saying I'm being "scalped" when a construction company buys timber to build into a house. Oh no, I'm being "robbed" of being able to buy my own wood, and the company is increasing the price of the wood by mere fact of buying it up, and then because the house costs more than what I would've paid for the wood.

financetechbro 11mo ago

Did you know that there are more PE firms in the US than there are McDonalds? https://finance.yahoo.com/news/now-more-pe-funds-mcdonald-120000877.html https://finance.yahoo.com/news/now-more-pe-funds-mcdonald-12... So while PE firms are not inherently “vulture” like, I would argue that the increasing number of firms fighting over the same number of assets to squeeze out returns (hopefully) above market returns leads to behavior that can be considered “vulture” like. For context, part of my work is to sell assets to PE firms

Ekaros 11mo ago
Is this some sort of shell game? Is there some benefit from artificially creating these firms to hold the assets? As I can't think there is enough demand to fully staff that amount of firms with all the full-time workers it would need.
- y0eswddl 11mo ago
  Almost certainly some kind of shell game - it seems many major PE companies own each other and smaller ones. I'd actually be very interested to see if anyone ever managed to break down who actually owns what
- financetechbro 10mo ago
  So most PE firms probably have around 5-15 employees. They don’t require too much manpower unless they’re trying to close a lot of deals. The main tasks are sourcing the asset, conducting diligence, negotiating terms, and supporting the asset post investment. This can all be done with an analyst, an associate, a VP, and a Partner/MD, each focusing on things from networking/relationship building to making financial models and other adhoc work. I think PE just become a very popular way for wall street grads and MBA types to make a decent living without necessarily having to be a good investor (PE funds don’t present their full returns until 10+ after the fund has closed).
MarkusAllen 10mo ago
[dead]