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It's very popular on here to attack PE--which I'm not going to especially defend. But it's also the case that PE also tends to come in when a company is already

by ghaff 9mo ago

It's very popular on here to attack PE--which I'm not going to especially defend. But it's also the case that PE also tends to come in when a company is already troubled in some manner. One answer I guess, is just go out of business on your own which many companies do.

rwmj 9mo ago
Private Equity has been buying up vets in the UK and jacking up prices massively, causing all sorts of knock-on negative consequences. Vets in the UK were not failing before. Unfortunately our competition authorities are toothless. Their proposed remedy is that vets will have to publish prices on their websites from now on. Woohoo. https://www.bbc.co.uk/news/articles/c8j3020kl04o https://www.bbc.co.uk/news/articles/c8j3020kl04o https://archive.ph/ikhpP https://archive.ph/ikhpP (link to FT.com)
xnx 9mo ago
> One answer I guess, is just go out of business on your own which many companies do Yes. One of the genuine services (in an economics sense) PE provides is to do the dirty reputation-ruining cash-grab tricks that original founder/owners don't have the stomach for.
bsder 9mo ago
> But it's also the case that PE also tends to come in when a company is already troubled in some manner. The problem is that PE also has a nasty habit of coming into a business that is marginally profitable but not spectacularly so, saddling it with giant amount of debt to vacuum up the cash flow, and killing the business. There is nothing wrong with a sustainably profitable business. Investors, however, want returns from the lottery ticket that they fund.
- FireBeyond 9mo ago
  Yup. They'll borrow huge sums on the credit and good basis of the company, and then "charge it" all to themselves as "management fees", vacuum it dry, and dump the company.
  - lotsofpulp 9mo ago
    The implication here is that there exist lenders willing to lend money that they will never get back. Who are these lenders, and why are they so bad at their job that even random commenters online know the folly of their business?
    - FireBeyond 9mo ago
      If you are a large business, you likely have multiple lines of credit already establish, potentially into the hundreds of millions or more range. Those are backed by the organizations credit and assets, and aren't likely to be yanked just because the organization has a new owner.

by ghaff 9mo ago

rwmj 9mo ago

Private Equity has been buying up vets in the UK and jacking up prices massively, causing all sorts of knock-on negative consequences. Vets in the UK were not failing before. Unfortunately our competition authorities are toothless. Their proposed remedy is that vets will have to publish prices on their websites from now on. Woohoo. https://www.bbc.co.uk/news/articles/c8j3020kl04o https://www.bbc.co.uk/news/articles/c8j3020kl04o https://archive.ph/ikhpP https://archive.ph/ikhpP (link to FT.com)

xnx 9mo ago

> One answer I guess, is just go out of business on your own which many companies do Yes. One of the genuine services (in an economics sense) PE provides is to do the dirty reputation-ruining cash-grab tricks that original founder/owners don't have the stomach for.

bsder 9mo ago

> But it's also the case that PE also tends to come in when a company is already troubled in some manner. The problem is that PE also has a nasty habit of coming into a business that is marginally profitable but not spectacularly so, saddling it with giant amount of debt to vacuum up the cash flow, and killing the business. There is nothing wrong with a sustainably profitable business. Investors, however, want returns from the lottery ticket that they fund.

FireBeyond 9mo ago
Yup. They'll borrow huge sums on the credit and good basis of the company, and then "charge it" all to themselves as "management fees", vacuum it dry, and dump the company.
- lotsofpulp 9mo ago
  The implication here is that there exist lenders willing to lend money that they will never get back. Who are these lenders, and why are they so bad at their job that even random commenters online know the folly of their business?
  - FireBeyond 9mo ago
    If you are a large business, you likely have multiple lines of credit already establish, potentially into the hundreds of millions or more range. Those are backed by the organizations credit and assets, and aren't likely to be yanked just because the organization has a new owner.