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Can someone steelman private equity, please? I'm honestly looking for the upsides (for non-investors) of when PE moves into an industry like medicine and begins

Can someone steelman private equity, please? I'm honestly looking for the upsides (for non-investors) of when PE moves into an industry like medicine and begins buying up businesses that traditionally aren't already large chains. I already hear the downsides frequently from someone whose work is directly affected.

twoodfin 12d ago
The upside is to the folks who sold the businesses they owned. Should they be outlawed from selling to certain classes of investor? Which?
- Grombobulous 12d ago
  It should be more about making certain levels of consolidation and deep erosion of local ownership illegal. We have run this country on an assumption that we must give businesses a high amount of freedom. An argument can be made that businesses have been given too much freedom in our system. We’ve allowed Amazon and Ticketmaster and Walmart to exist and they shouldn’t exist in their present form. Healthcare practices that provide necessary care shouldn’t even really be allowed to be for-profit entities if you ask me. The incentives become too perverse as a result.
  - deleted 12d ago
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  - lotsofpulp 12d ago
    Can you define profit? Would a doctor be allowed to earn more than $200 per hour? $300 per hour? $400 per hour? Is a doctor allowed to be paid per procedure or time? How much would you want to sacrifice your 20s and early 30s? How much would you need to work in the middle of nowhere where your kids won’t have the best opportunities?
    - Grombobulous 12d ago
      I updated my comment, I mean a for-profit entity versus non-profit, which the IRS already defines. Not-for-profit entities can still pay market rate wages to employees and owners.
  - tekla 12d ago
    Should Doctors have a legally enforced max pay? Same with the web devs, max $150K, anything else is just profit driven bullshit right?
    - Grombobulous 12d ago
      No, not-for-profit entities pay market rate salaries. This is already a well-established system.
  - gruez 12d ago
    >Healthcare practices that provide necessary care shouldn’t even really be allowed to be for-profit entities if you ask me. The incentives become too perverse as a result. Why stop at healthcare? Why not other essentials of life, like food or toilet paper?
    - wyre 12d ago
      Hippocratic oath?
    - Grombobulous 12d ago
      You’re absolutely right. For example, we’ve seen the negative impacts from excessive agricultural consolidation. Many of them already lack profitability without subsidy. Many agricultural products all pass through the same mega-sized processors and entities. Driscoll’s, Tyson, etc. We’ve already made things like water and sanitation non-profit/government owned so the idea of doing more of that for food and essentials isn’t that crazy.
      - gruez 12d ago
        >You’re absolutely right. For example, we’ve seen the negative impacts from excessive agricultural consolidation. Like what? >Many of them already lack profitability without subsidy. That doesn't mean anything without context. How are the non-PE farms doing? >We’ve already made things like water and sanitation non-profit/government owned so the idea of doing more of that for food and essentials isn’t that crazy. sanitation: please see https://en.wikipedia.org/wiki/Waste_Management,_Inc https://en.wikipedia.org/wiki/Waste_Management,_Inc. water, but not power, or natural gas?
        Grombobulous 12d ago
        Google “taylor farms cyclospora” or “tyson beef prices shortage” for an example of the problems of highly consolidated processing. I wasn’t talking about private equity farms versus not, I’m generally talking about industry consolidation. Sanitation includes sewers which are typically municipal. Power and natural gas are legal monopolies with strict rules on pricing. There are also public electric utilities such as Cleveland Public Power.
  - furytrader 12d ago
    "We’ve allowed Amazon and Ticketmaster and Walmart to exist and they shouldn’t exist in their present form." Do you realize that when Walmart moves into a community, prices charged for everyday things overall drop significantly, both at Walmart and their competition, which means that poor families are able to buy more with every dollar. What do you have against poor people?
    - ButlerianJihad 12d ago
      > ["poor"] families are able to buy more with every dollar. https://en.wikipedia.org/wiki/Boots_theory https://en.wikipedia.org/wiki/Boots_theory
    - Grombobulous 12d ago
      And the employer with the largest amount of employees using SNAP benefits is… Walmart is subsidized by the government to the tune of $2,000 per employee due to their low wages: https://rmfu.org/taxpayer-dollars-subsidize-wal-mart/ https://rmfu.org/taxpayer-dollars-subsidize-wal-mart/ [1] They then get to skim the other side of those subsidies, too, since they sell so many items that qualify for SNAP and WIC, as well as being one of the largest if not the largest prescription supplier in the country. (25% of Walmart employees qualify for Medicaid https://mafainsurance.com/how-many-walmart-employees-are-on-medicaid.html https://mafainsurance.com/how-many-walmart-employees-are-on-...) So their employees on SNAP and Medicaid turn right around and spend that money inside Walmart. > both at Walmart and their competition What competition? When Walmart comes to town, the competition closes. [1] Probably a lot higher since this article is about 20 years old
      - gruez 12d ago
        >And the employer with the largest amount of employees using SNAP benefits is… >Walmart is subsidized by the government to the tune of $2,000 per employee due to their low wages: https://rmfu.org/taxpayer-dollars-subsidize-wal-mart/ https://rmfu.org/taxpayer-dollars-subsidize-wal-mart/ [1] And what happens if walmart closed up shop? Do those employees magically evaporate and not need benefits? Why are we putting the blame on the employee's best employment option? >What competition? When Walmart comes to town, the competition closes. Why? Because they're sending goon squads to trash all the existing businesses? If walmart replacing "the competition" because they're offering lower prices and consumers are switching, why is this bad?
  - jolmg 12d ago
    > Healthcare practices that provide necessary care shouldn’t even really be allowed to be for-profit entities if you ask me. The incentives become too perverse as a result. You don't need to disallow them for necessary care to be provided. You can just have public healthcare programs. That can look like publicly-owned hospitals or regulation that private hospitals must provide certain services under certain conditions if they want to keep operating. Private healthcare then works to provide more than that basic service that fulfills necessary care, to the benefit of the public that can afford more.
  - runako 12d ago
    > We’ve allowed Amazon and Ticketmaster and Walmart to exist and they shouldn’t exist in their present form. Unpopular knowledge is that these businesses are generally illegal in their current forms under existing US law. The relevant laws are still in effect, they are just rarely enforced. The scale of the lawbreaking runs to the trillions of dollars annually, and it directly harms every US consumer. The illegal conduct is so pervasive that even explaining the existing federal law makes one sound ridiculous, because companies have been explicitly advertising illegal behavior for decades. Because there is no sanction. One of my faves is the notion that $BIG_RETAILER can buy in bulk and get better pricing, which they pass on to the consumer. You may have seen a company advertise something like this. It sounds like smart business! There is an active federal law[1] that explicitly prohibits this arrangement. Lack of enforcement of that law is a factor in the disappearance of the American "high street" and the demise of many small retailers. My #1 call for reform in the US is to simply start enforcing laws, even if doing so makes rich people/companies uncomfortable. 1 - https://en.wikipedia.org/wiki/Robinson–Patman_Act https://en.wikipedia.org/wiki/Robinson–Patman_Act
    - gruez 12d ago
      >1 - https://en.wikipedia.org/wiki/Robinson–Patman_Act https://en.wikipedia.org/wiki/Robinson–Patman_Act I'm not a lawyer, but a cursory search shows there's a bunch of carveouts. It's not a straightforward ban on all favorable pricing for big players. For instance, if there's an actual cost justification (eg. bigger buyer = more efficient shipping) that's allowed. Same with offering volume discounts that are available to all buyers. That's not to say everything's above board, but it's not as simple as "wow big box stores get better pricing than mom and pop shops, so there must be federal laws being violated".
      - runako 12d ago
        I hesitated before linking that specific statute because I suspected someone would parse it as you have. Not a bad thing, just distracts from the larger point that the US government currently has tools (of which Robinson-Patman is only one) to prevent & reverse the extreme consolidation that harms every American. In the context of this article -- we may not need a new ban specific to preventing private equity from owning medical practices. We could simply enforce existing laws around e.g. market consolidation, consumer harm, etc. Adding a new law to also be ignored seems silly.
- mondomondo 12d ago
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- EA-3167 12d ago
  If the business is a hospital? Yes.
  - georgemcbay 12d ago
    > If the business is a hospital? I'd expand that to any type of business that has effectively inelastic demand through the ability to hold people emotionally hostage. So, for example, in addition to hospitals also include veterinarians, funeral services, family planning, etc. Soulless PE vultures should be barred from all of this.
    - EA-3167 12d ago
      That’s a good expansion of the premise, I’d support your idea wholeheartedly. Let PE raid chain restaurants and toy stores, not essential services where they add no value and only extract wealth.
    - shermantanktop 12d ago
      Funeral services in the US got aggressively consolidated already, decades ago. Look up SCI - owns over 1,500 funeral homes and 400 cemeteries.
- PyWoody 12d ago
  Should they be outlawed from selling to certain classes of investor? Which? Yes. This is already the case for law firms as they have to be owned and managed by lawyers, in most jurisdictions.
  - alex43578 12d ago
    That's easily circumvented with management service organizations. More broadly, it's a stupid idea, especially beyond a few areas like law. If you own a golf course, you shouldn't have to sell only to a golfer.
    - cindyllm 12d ago
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tekla 12d ago
Easy. PE 99% of the time buy businesses that were already failing and provide a lifeline. A failing business can't afford to pay for expensive medical treatments without a loan that a bank will not provide since it is failing. People who are vehemently against PE generally do not have any idea of how the system works
- thrance 12d ago
  That's just not true. Distressed and turnaround investing represent less than 20% of PE acquisitions [0]. [0] https://www.ey.com/en_us/insights/private-equity/pulse https://www.ey.com/en_us/insights/private-equity/pulse
- Tanjreeve 12d ago
  They don't have to have an in-depth understanding of leveraged finance to get pissed off when their doctors start doubling prices or their own employment conditions get worse or their parents get treated badly in care homes because the staff are now overworked etc. they're mad at the outcomes they're overwhelmingly not actually trying to debate the merits of it from an exit liquidity perspective.
- apical_dendrite 12d ago
  That's one model of private equity, but PE has also been buying up very successful local businesses in areas like veterinary care. The PE firm keeps the name and branding of the local vet because people have traditionally wanted to take their pet to a trusted local vet, not a big chain.
  - dansquizsoft 12d ago
    So this vet practice are now a big chain except for in name only?
    - apical_dendrite 12d ago
      Yes, look up NVA vet. They own 1000+ vet practices but they all sound like small, local businesses.
deleted 12d ago
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gruez 12d ago
written by someone who worked in private equity for 20 years: https://www.bloomberg.com/news/articles/2025-06-06/private-equity-doesn-t-actually-want-to-kill-the-american-dream https://www.bloomberg.com/news/articles/2025-06-06/private-e... https://archive.is/27tJr https://archive.is/27tJr
- eradicatethots 12d ago
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prplfsh 12d ago
Many medical practices (and other businesses) are poorly operated and administered. I think of my dentist: terrible website (even by 1995 standards), awful at follow up, weird insurance coverage (since she doesn't have time to follow up with new plans it seems) and almost no appointment reminders. There are obvious things to do that could drive business for her. It makes sense to me that someone could come in and say "hey, let me run the business + finance side of the house while you practice medicine" and at least on paper I can see a real world where that works out for everybody. Of course, soon you end up with dentists pushing unnecessary procedures and more, so it doesn't always works out that way.
- shermantanktop 12d ago
  Improving efficiency and optimizing profit are two overlapping segments on the road to crap. It’s not easy to stop the car once you put the bean counters in the driver's seat. If a company is able to do so, it’s usually because there’s a strong leader or culture to resist the slide. But otherwise it’s a thousand small decisions that all seem reasonable on their own.
- NegativeK 12d ago
  In human med, it's a pretty standard practice to offer a management company 10% ownership for them to handle the business shit. I'm not arguing with you; I'm legitimately curious what happened to that model and why PE has swooped in as more attractive to doctors. Maybe it's the payout and/or the fact that they don't have to handle business owner decisions at _all_ anymore?
  - alex43578 12d ago
    Those are two different things, typically. A business manager taking 10% means they're still running the practice day to day and seeing patients. PE will come in to buy the entire practice from the doctor/dentist/vet that owns the practice, buying it from them entirely.
mhh__ 12d ago
PE staff are more intelligent and more shrewd than the people running the businesses they buy. Being a good doctor doesn't make you a good businessman. I'm not a huge fan of PE but the point of economics to deliver cheap and quality goods to consumers not keep people in a job. In healthcare in US in particular I think the main thing that capital should be (if regulators allow) boutique / specialists that e.g. are the best in the biz at doing MRI scans, in some states my understanding is that it's literally illegal to start a business aiming to make one small part of the process better.
- cool_dude85 12d ago
  What does it mean in this context to be more intelligent and shrewd than the existing owners? Delivering better profit margins?
  - SoftTalker 12d ago
    I mean, losing money is not sustainable. If a doctor or physician group isn't business savvy and can't earn a profit they will eventually go under. That's not good for the patient.
    - cool_dude85 12d ago
      OK, but making money, though it may be less than a PE company would, is. Where do most doctor's offices fall?
      - csa 12d ago
        Most doctors make good money, but most who are good doctors could make much more. Simple example pitch that many general practitioners might consider using (based on local laws, of course): “Insurance covers C, Y, and Z. I can offer these additional services for A, B, and C that are not covered by insurance.” Where I live, you get a lot of this via “concierge doctors”, but that system can go far beyond basic concierge service, and people are willing to pay for top quality care.
  - 12d ago
frisco 12d ago
Many new medical treatments/approaches involve heavy capex (robots, light and ion sources, imaging systems, etc) and removing private money that doesn't belong to individual physicians personally will suck a vast amount of capital out of healthcare, creating significant forces against innovation and deployment.
matteoraso 12d ago
PE exists because a lot of companies are poorly managed. It's better for your local hospital to be taken over by a PE firm than to go out of business. You can say that it would be even better if the government ran the hospital, and you would be right, but that would require a radical overhaul of the American healthcare system. Until that happens, PE plays a major role in keeping things working.
- mmooss 12d ago
  > It's better for your local hospital to be taken over by a PE firm than to go out of business. It's a false choice. The healthcare system has long dealt with and deal with that situation without private equity.
- tremon 12d ago
  > PE exists because a lot of companies are poorly managed. This is a non-sequitur. The existence of private equity has an effect on how companies are run, not the other way around. Many well-run companies are targeted by PE exactly because they're well-run and have carved out a sizable captive audience for themselves. And when PE takes over, said company usually ceases to be well-run on all metrics except one. PE exists because of the non-linear relationship between money accumulation and power. This effect means that it is more beneficial for any company to hoard capital as much as it can rather than "waste" it on the wider economy; after accumulating enough capital, the company can pivot away from whatever market it was in before and focus solely on asset management. PE mostly results from too low taxation on inert wealth compounded by zero-interest rate monetary policies.
Panzer04 12d ago
Easy to imagine practices where the primary owner is going to retire and looking for an out. Maybe they find a buyer in a doctor, maybe they don't, but PE provides them an exit that keeps the practice operating in the community. Many people don't really run businesses efficiently. There was an interesting video I saw recently where a sole doctor practice made a few changes to their workflow that allowed them to hire more doctors and handle 2x as many people - I would expect a PE firm would pursue similar changes that help increase the number of people they can service, increasing competitiveness and lowering prices in the long run. I don't know how these tradeoffs interact with patient care, but I wouldn't inherently expect PE to be worse at this than any other operating model.
- maxerickson 12d ago
  Lots of other efficiencies to look at. Tons of them are directly bad for the patient (capturing more of the surplus is an efficiency that businesses generally go hard at). Ultimately, I think the issue is when people making decisions are able to treat the impact as an abstraction.
- markdown 12d ago
  > and lowering prices in the long run. My sweet summer child...
- sandeepkd 12d ago
  A structure to run business efficiently using practiced methods is always a good thing. However from what little I have understood, the goal of Private Equity is to maximize the dollar value on their investment. Somehow they have settled with the playbook that running a business even profitably isn't the best idea. Instead its much more profitable to take over the struggling business at good price, squeeze everything possible from the assets (thats where PE seem to be investing their expertise unfortunately) over duration of time. Update the books in a manner that it saves money on taxes and carry forwards the loss, making money in the process.
  - phkahler 12d ago
    My favorite is to sell the building(s) to their private real estate company and lease back. Then IPO the company and keep the rent coming on a 25 year lease.
w29UiIm2Xz 12d ago
These businesses would simply stop existing if no purchaser came forward. Many first-world economies face a demographic cliff where boomers are retiring and there is nobody in the next generation who can afford to take over the local dentist office, the HVAC company, etc.
- HaloZero 12d ago
  I don’t think that’s true though in all cases. Sometimes PE just offers more money passing the debt into the company they acquire. But smaller players would still take control.
- Xirdus 12d ago
  You are forgetting that if PE weren't there to buy out local dentist offices at a premium, then these offices would sell at far lower price, making them affordable to the next generation.
  - deleted 12d ago
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- tremon 12d ago
  That's not a demographic cliff, that's a financial power cliff, and it's caused exactly by too much money being tied up in PE companies and offshore accounts. All that money taken out of the local economy is leaving each generation with an increasingly smaller size of the pie, even when the pie itself has been consistently growing. You even admit yourself that the problem is that the next generation "can't afford" to maintain the outgoing generation's standard of wealth.
- underlipton 11d ago
  It sounds like there's too much money in PE and not enough in the hands of young people. I'm told there is a secret ancient technique for rectifying such a situation.
tbrownaw 12d ago
> Can someone steelman private equity, please? Step back and look at what it fundamentally is. Person A has a business they want to sell. Person B has a pile of money and thinks that that business is (or can be) a good investment. That's it. So, what happens if person A is prohibited from selling their business? Are they forced to keep working because they don't have enough other savings to retire on? Do they shut the business down in order to retire? Something else? . Calls to ban private equity are attempts to play "shoot the messenger".
- sandeepkd 12d ago
  May be categorizing the different private equities can be helpful here. A PE interested and invested for growth is always the best outcome. A PE only looking to salvage and squeeze is that gives the bad branding to PE.
  - 0xDEAFBEAD 12d ago
    It basically comes down to interest rates right? If interest rates are low, the discounted-cash-flows analysis will favor maximizing long-run profitability. If interest rates are high, you can do better by squeezing the business in the short term and placing the money you obtained into some sort of high-yield, low-risk investment vehicle.
    - sandeepkd 12d ago
      The positive argument about PE adding value is around efficiency of processes and scale. Interest rates can make a difference however in reality I doubt that it effects the outcome in most cases. Companies have already invested in staff with certain type of expertise and they are unlikely to change their plans or rehire based on the interest rates in short run.
      - works_at_pe 12d ago
        It's not always "efficiency". My PE is SaaS heavy portfolio. Pricing strategy, GTM, product roadmap; companies have rev, good moat, good customer base. But clear opportunity to grow rev. Many companies are held by original founders. Leadership teams in eng and product have been the same for a decade+; lacking exposure to how the industry is shifting. AI, for example, has slow adoption in some cases.
afavour 12d ago
Small(er) businesses can be poorly run. In theory private equity takes knowledge already in practise in other locations and shares it with this new location, improving results. Downside of course is that they care a lot less about that specific location than the previous owners would have. One specific practise I’d like to see banned is private equity buying companies with debt the company then assumes. It staggers me that it’s legal.
- lazide 12d ago
  I’ve literally never seen that happen. what does always happen is cutting ‘non essentials’ that are essential until the company implodes.
  - ironSkillet 12d ago
    That is one of the core strategies in the private equity playbook.
    - 0xDEAFBEAD 12d ago
      Why would it be profitable for the company they just paid a lot of money to acquire to implode?
      - TylerE 12d ago
        They sell off everything of value before it implodes and cash out. THEN they let it implode with nothing but the debt remaining.
        0xDEAFBEAD 12d ago
        Why would banks lend to such an enterprise if they don't expect to get paid back?
        TylerE 12d ago
andsoitis 12d ago
> Can someone steelman private equity PE attacks organizational sclerosis, can save companies that otherwise slowly deteriorate, reallocates resources faster, creates an unusually powerful form of corporate governance, Debt can impose useful discipline, can provide capabilities that smaller companies couldn't build themselves. A society doesn't necessarily benefit from preserving every existing job. It benefits from creating increasingly productive jobs.
- pixl97 12d ago
  > increasingly productive jobs. This needs to be defined a little bit better. If I own a hospital that makes infinite money and every patient that comes to it dies the economy measures this is infinite productivity. This is contrived, but really matches some of what we see in real life. This is why making a measurement a target can be horrifically destructive and contrary to the actual goal society wants. The west doesn't seem to believe in the idea of social stability over increased profits which can lead to things like corporations being the social structure that is optimized for rather than the wellbeing of the individuals it contains. Left to run out of control the society can collapse.
  - andsoitis 12d ago
    > If I own a hospital that makes infinite money and every patient that comes to it dies the economy measures this is infinite productivity. This is contrived, but really matches some of what we see in real life. You wouldn't have any business if all, or many, of your patients die.
    - AngryData 12d ago
      The history of government regulations mostly only being made in response to people dieing seems to refute that. If what you claimed is true, those businesses killing people would have gone under, rather than continuing until there is enough public outcry to regulate it.
    - metiscus 12d ago
      To be fair, in an emergency one does not usually get to choose the hospital they are taken to by the ambulance company.
toast0 12d ago
Private Equity allows an owner to sell their income generating but slowly dieing company for its value today. The company will keep operating for 3-5 years and then rapidly shutdown. This is valuable for business owners, because it gives them a way to get the value out of a failing business without having to ride it all the way into the ground. It's valuable for consumers because it provides locations to shop for halloween supplies.
snapplebobapple 12d ago
Pe is good when it is taking big risks on something new. That is hard so that is not what most pe does. Most pe is just figuring out ways to insert artificial inefficiencies into the system to syphon money off. Ie tax arbitrage, patent/copyright abuse, geographic or other market power abuse, etc. Basically find a way to move money around the system with no net benefit to society while having a bunch of it fall in your pocket is 90% of what pe does and its poison. The other 10% is vitally important to continued growth and prosperity and its often hard to tell which is happening until its over.
dghlsakjg 12d ago
Private equity just means controlling a company outside of the public stock markets, it is incredibly broad, and covers everything from blackrock buying every vets office in an area, to a plumber buying out another plumber when they want to retire. The steelman argument is that private equity is just property rights. If I build a business I get to decide what to do with it. What most people are arguing against is a specific kind of PE where an institutional investor will either use aggressive financial engineering to force a profit, even if it kills the business, or when those same investors aggregate market share to the point where it is detrimental to consumers. Sprinkle in a little bit of heartless MBA bullshit, and that is what people specifically don’t like.
- caminante 12d ago
  It is a broad term. VC is a subset of PE. In medicine, it's a solution for someone who wants liquidity (buy kids new home, help local dog shelter, add a new mistress) and doesn't want to retire, yet. The problem is that the terms are custom and YMMV as an existing patient of said practice.
- holmesworcester 12d ago
  A stronger steelman is that it results in resources getting allocated in smarter/healthier ways across society. If there's some business that's getting by but the land it's on is more valuable (e.g. for housing) than the business, some investors buy the business, sell the land, make the business account for the land value, wind the business down if it can't, and there are apartments there a few years later.
  - dghlsakjg 12d ago
    Is that not just a subset of this: > The steelman argument is that private equity is just property rights. If I build a business I get to decide what to do with it.
- viccis 12d ago
  >If I build a business I get to decide what to do with it. I don't think that follows necessarily, especially not categorically.
DonsDiscountGas 12d ago
The most obvious answer is that freedom needs no justification, restrictions on freedom need a justification.
balderdash 12d ago
While not perhaps the best argument is the private equity provides liquidity for founders that want to exit. If you started business X, you’ve grown it for 20-40 years and you want to retire, selling is typically the answer. Let’s say the business makes $1m/yr after tax cash flow, PE might buy for $10m, besides PE there aren’t a bunch of likely buyers for your business (of course maybe there is a big competitor, and maybe you could sell it to an employee (but they probably don’t have the money and would need you to seller finance etc)). So for entrepreneurs with a successful small business (say $2-5m+ of ebitda) selling to private equity is the clearest path to a liquidity event for them.
whatsThisBtn4 12d ago
Historically we've seen capitalism be a good thing. Probably the biggest problem with medical is that it's incredibly regulated for the industry's benefit.
- claytongulick 12d ago
  I don't think I agree with this, most of the regulation I see is for patient protection. Stark, AKS, HIPPA, etc... are all strong regulation aimed at protecting individuals. From fee-splitting prohibitions to FDA regulated medical devices, almost all of the day to day regulations I've dealt with in healthcare are squarely aimed at ensuring safety, protecting privacy, preventing fraud and controlling costs.
czhu12 12d ago
The economist did a piece in defense of private equity a few months ago. Basically boils down to more efficient resource allocation across an entire economy, deep pools of capital to rapidly transform businesses into things people want to buy from. Gift link: https://www.economist.com/podcasts/2026/02/19/a-love-letter-to-private-equity?giftId=NmVmNzZjODctZjEzMy00MjVjLThmODktZDUyMmExZDMyNjFl&utm_campaign=gifted_article https://www.economist.com/podcasts/2026/02/19/a-love-letter-...
- cyberax 12d ago
  The thing is, we're now learning that efficient resource allocation in the short run is not necessarily what we want in the long run.
havaloc 12d ago
I live in a small midwest market, and all the landscaping companies are locally owned and awful. PE bought two of them, combined them into one, and now they, at about the same cost, do what they say they are going to do, answer the phone, hire competent people, and do a good job. Likewise, PE has bought up most of the local plumbing and HVAC, and that's been a bit of a bummer, and gotten more expensive, but if you need someone right now, they are there (and answer the phone, etc), as opposed to the local concern who may be on vacation and can get back to you in 2 weeks. There are some really good local small businesses/trades people, but like the 1950s, in a lot of aspects they are overly romanticized.
- ChickeNES 12d ago
  My controversial opinion: chains/large businesses are more convenient, cheaper, better (and more consistent) service, and the big one: you can complain up the chain when a local branch/franchise fucks up vs dealing with a sole proprietor. There's plenty of small businesses I do value (thrift stores, bodegas, etc), but for services? The choice is obvious.
joshjkim 12d ago
At a general level, PE (and really much of capitalism generally) is built around the idea that financial efficiency should be the guiding principle re: capital allocation, so the steelman argument is that PE takes financially inefficient businesses, makes them more financially efficient, and that is good because that's the best way to allocate capital. a financially inefficient business may be a business that employs more people than it absolutely needs, a business that treats customers/vendors more generously than it absolutely needs to, or even a business that exists as a going concern that would be more financially efficient if sold off for parts or went into bankruptcy. i personally don't believe financial efficiency should be the guiding principle for everything or really anything, and I believe as a society we should account more for non-financial efficiencies (like treating human beings generously and kindly), and I think it's fine for an inefficient business to continue existing if that means more people have jobs for longer or customers/vendors are treated more generously. fundamentally, i think this line of thinking is dehumanizing, as it views the world (humans, nature, information, knowledge etc.) as resources/materials and not much else. that all being said, i at least understand the principles and the materialist idea that everything can be viewed as material/resource and why people pursue them (esp because pursuing them effectively can make you fabulously wealthy). i often say when talking about this stuff with friends: if you're willing/able to see everything (including/especially people) as resource/material, you're well positioned to obtain a lot of material resources/material. whether that's a good thing for you or the rest of the world is another question (and my view is that it's straight up bad).
deleted 12d ago
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twoodfin 12d ago

The upside is to the folks who sold the businesses they owned. Should they be outlawed from selling to certain classes of investor? Which?

Grombobulous 12d ago
It should be more about making certain levels of consolidation and deep erosion of local ownership illegal. We have run this country on an assumption that we must give businesses a high amount of freedom. An argument can be made that businesses have been given too much freedom in our system. We’ve allowed Amazon and Ticketmaster and Walmart to exist and they shouldn’t exist in their present form. Healthcare practices that provide necessary care shouldn’t even really be allowed to be for-profit entities if you ask me. The incentives become too perverse as a result.
- deleted 12d ago
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- lotsofpulp 12d ago
  Can you define profit? Would a doctor be allowed to earn more than $200 per hour? $300 per hour? $400 per hour? Is a doctor allowed to be paid per procedure or time? How much would you want to sacrifice your 20s and early 30s? How much would you need to work in the middle of nowhere where your kids won’t have the best opportunities?
  - Grombobulous 12d ago
    I updated my comment, I mean a for-profit entity versus non-profit, which the IRS already defines. Not-for-profit entities can still pay market rate wages to employees and owners.
- tekla 12d ago
  Should Doctors have a legally enforced max pay? Same with the web devs, max $150K, anything else is just profit driven bullshit right?
  - Grombobulous 12d ago
    No, not-for-profit entities pay market rate salaries. This is already a well-established system.
- gruez 12d ago
  >Healthcare practices that provide necessary care shouldn’t even really be allowed to be for-profit entities if you ask me. The incentives become too perverse as a result. Why stop at healthcare? Why not other essentials of life, like food or toilet paper?
  - wyre 12d ago
    Hippocratic oath?
  - Grombobulous 12d ago
    You’re absolutely right. For example, we’ve seen the negative impacts from excessive agricultural consolidation. Many of them already lack profitability without subsidy. Many agricultural products all pass through the same mega-sized processors and entities. Driscoll’s, Tyson, etc. We’ve already made things like water and sanitation non-profit/government owned so the idea of doing more of that for food and essentials isn’t that crazy.
    - gruez 12d ago
      >You’re absolutely right. For example, we’ve seen the negative impacts from excessive agricultural consolidation. Like what? >Many of them already lack profitability without subsidy. That doesn't mean anything without context. How are the non-PE farms doing? >We’ve already made things like water and sanitation non-profit/government owned so the idea of doing more of that for food and essentials isn’t that crazy. sanitation: please see https://en.wikipedia.org/wiki/Waste_Management,_Inc https://en.wikipedia.org/wiki/Waste_Management,_Inc. water, but not power, or natural gas?
      - Grombobulous 12d ago
        Google “taylor farms cyclospora” or “tyson beef prices shortage” for an example of the problems of highly consolidated processing. I wasn’t talking about private equity farms versus not, I’m generally talking about industry consolidation. Sanitation includes sewers which are typically municipal. Power and natural gas are legal monopolies with strict rules on pricing. There are also public electric utilities such as Cleveland Public Power.
- furytrader 12d ago
  "We’ve allowed Amazon and Ticketmaster and Walmart to exist and they shouldn’t exist in their present form." Do you realize that when Walmart moves into a community, prices charged for everyday things overall drop significantly, both at Walmart and their competition, which means that poor families are able to buy more with every dollar. What do you have against poor people?
  - ButlerianJihad 12d ago
    > ["poor"] families are able to buy more with every dollar. https://en.wikipedia.org/wiki/Boots_theory https://en.wikipedia.org/wiki/Boots_theory
  - Grombobulous 12d ago
    And the employer with the largest amount of employees using SNAP benefits is… Walmart is subsidized by the government to the tune of $2,000 per employee due to their low wages: https://rmfu.org/taxpayer-dollars-subsidize-wal-mart/ https://rmfu.org/taxpayer-dollars-subsidize-wal-mart/ [1] They then get to skim the other side of those subsidies, too, since they sell so many items that qualify for SNAP and WIC, as well as being one of the largest if not the largest prescription supplier in the country. (25% of Walmart employees qualify for Medicaid https://mafainsurance.com/how-many-walmart-employees-are-on-medicaid.html https://mafainsurance.com/how-many-walmart-employees-are-on-...) So their employees on SNAP and Medicaid turn right around and spend that money inside Walmart. > both at Walmart and their competition What competition? When Walmart comes to town, the competition closes. [1] Probably a lot higher since this article is about 20 years old
    - gruez 12d ago
      >And the employer with the largest amount of employees using SNAP benefits is… >Walmart is subsidized by the government to the tune of $2,000 per employee due to their low wages: https://rmfu.org/taxpayer-dollars-subsidize-wal-mart/ https://rmfu.org/taxpayer-dollars-subsidize-wal-mart/ [1] And what happens if walmart closed up shop? Do those employees magically evaporate and not need benefits? Why are we putting the blame on the employee's best employment option? >What competition? When Walmart comes to town, the competition closes. Why? Because they're sending goon squads to trash all the existing businesses? If walmart replacing "the competition" because they're offering lower prices and consumers are switching, why is this bad?
- jolmg 12d ago
  > Healthcare practices that provide necessary care shouldn’t even really be allowed to be for-profit entities if you ask me. The incentives become too perverse as a result. You don't need to disallow them for necessary care to be provided. You can just have public healthcare programs. That can look like publicly-owned hospitals or regulation that private hospitals must provide certain services under certain conditions if they want to keep operating. Private healthcare then works to provide more than that basic service that fulfills necessary care, to the benefit of the public that can afford more.
- runako 12d ago
  > We’ve allowed Amazon and Ticketmaster and Walmart to exist and they shouldn’t exist in their present form. Unpopular knowledge is that these businesses are generally illegal in their current forms under existing US law. The relevant laws are still in effect, they are just rarely enforced. The scale of the lawbreaking runs to the trillions of dollars annually, and it directly harms every US consumer. The illegal conduct is so pervasive that even explaining the existing federal law makes one sound ridiculous, because companies have been explicitly advertising illegal behavior for decades. Because there is no sanction. One of my faves is the notion that $BIG_RETAILER can buy in bulk and get better pricing, which they pass on to the consumer. You may have seen a company advertise something like this. It sounds like smart business! There is an active federal law[1] that explicitly prohibits this arrangement. Lack of enforcement of that law is a factor in the disappearance of the American "high street" and the demise of many small retailers. My #1 call for reform in the US is to simply start enforcing laws, even if doing so makes rich people/companies uncomfortable. 1 - https://en.wikipedia.org/wiki/Robinson–Patman_Act https://en.wikipedia.org/wiki/Robinson–Patman_Act
  - gruez 12d ago
    >1 - https://en.wikipedia.org/wiki/Robinson–Patman_Act https://en.wikipedia.org/wiki/Robinson–Patman_Act I'm not a lawyer, but a cursory search shows there's a bunch of carveouts. It's not a straightforward ban on all favorable pricing for big players. For instance, if there's an actual cost justification (eg. bigger buyer = more efficient shipping) that's allowed. Same with offering volume discounts that are available to all buyers. That's not to say everything's above board, but it's not as simple as "wow big box stores get better pricing than mom and pop shops, so there must be federal laws being violated".
    - runako 12d ago
      I hesitated before linking that specific statute because I suspected someone would parse it as you have. Not a bad thing, just distracts from the larger point that the US government currently has tools (of which Robinson-Patman is only one) to prevent & reverse the extreme consolidation that harms every American. In the context of this article -- we may not need a new ban specific to preventing private equity from owning medical practices. We could simply enforce existing laws around e.g. market consolidation, consumer harm, etc. Adding a new law to also be ignored seems silly.
mondomondo 12d ago
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EA-3167 12d ago
If the business is a hospital? Yes.
- georgemcbay 12d ago
  > If the business is a hospital? I'd expand that to any type of business that has effectively inelastic demand through the ability to hold people emotionally hostage. So, for example, in addition to hospitals also include veterinarians, funeral services, family planning, etc. Soulless PE vultures should be barred from all of this.
  - EA-3167 12d ago
    That’s a good expansion of the premise, I’d support your idea wholeheartedly. Let PE raid chain restaurants and toy stores, not essential services where they add no value and only extract wealth.
  - shermantanktop 12d ago
    Funeral services in the US got aggressively consolidated already, decades ago. Look up SCI - owns over 1,500 funeral homes and 400 cemeteries.
PyWoody 12d ago
Should they be outlawed from selling to certain classes of investor? Which? Yes. This is already the case for law firms as they have to be owned and managed by lawyers, in most jurisdictions.
- alex43578 12d ago
  That's easily circumvented with management service organizations. More broadly, it's a stupid idea, especially beyond a few areas like law. If you own a golf course, you shouldn't have to sell only to a golfer.
  - cindyllm 12d ago
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tekla 12d ago

Easy. PE 99% of the time buy businesses that were already failing and provide a lifeline. A failing business can't afford to pay for expensive medical treatments without a loan that a bank will not provide since it is failing. People who are vehemently against PE generally do not have any idea of how the system works

thrance 12d ago
That's just not true. Distressed and turnaround investing represent less than 20% of PE acquisitions [0]. [0] https://www.ey.com/en_us/insights/private-equity/pulse https://www.ey.com/en_us/insights/private-equity/pulse
Tanjreeve 12d ago
They don't have to have an in-depth understanding of leveraged finance to get pissed off when their doctors start doubling prices or their own employment conditions get worse or their parents get treated badly in care homes because the staff are now overworked etc. they're mad at the outcomes they're overwhelmingly not actually trying to debate the merits of it from an exit liquidity perspective.
apical_dendrite 12d ago
That's one model of private equity, but PE has also been buying up very successful local businesses in areas like veterinary care. The PE firm keeps the name and branding of the local vet because people have traditionally wanted to take their pet to a trusted local vet, not a big chain.
- dansquizsoft 12d ago
  So this vet practice are now a big chain except for in name only?
  - apical_dendrite 12d ago
    Yes, look up NVA vet. They own 1000+ vet practices but they all sound like small, local businesses.

deleted 12d ago

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gruez 12d ago

written by someone who worked in private equity for 20 years: https://www.bloomberg.com/news/articles/2025-06-06/private-equity-doesn-t-actually-want-to-kill-the-american-dream https://www.bloomberg.com/news/articles/2025-06-06/private-e... https://archive.is/27tJr https://archive.is/27tJr

eradicatethots 12d ago
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prplfsh 12d ago

Many medical practices (and other businesses) are poorly operated and administered. I think of my dentist: terrible website (even by 1995 standards), awful at follow up, weird insurance coverage (since she doesn't have time to follow up with new plans it seems) and almost no appointment reminders. There are obvious things to do that could drive business for her. It makes sense to me that someone could come in and say "hey, let me run the business + finance side of the house while you practice medicine" and at least on paper I can see a real world where that works out for everybody. Of course, soon you end up with dentists pushing unnecessary procedures and more, so it doesn't always works out that way.

shermantanktop 12d ago
Improving efficiency and optimizing profit are two overlapping segments on the road to crap. It’s not easy to stop the car once you put the bean counters in the driver's seat. If a company is able to do so, it’s usually because there’s a strong leader or culture to resist the slide. But otherwise it’s a thousand small decisions that all seem reasonable on their own.
NegativeK 12d ago
In human med, it's a pretty standard practice to offer a management company 10% ownership for them to handle the business shit. I'm not arguing with you; I'm legitimately curious what happened to that model and why PE has swooped in as more attractive to doctors. Maybe it's the payout and/or the fact that they don't have to handle business owner decisions at _all_ anymore?
- alex43578 12d ago
  Those are two different things, typically. A business manager taking 10% means they're still running the practice day to day and seeing patients. PE will come in to buy the entire practice from the doctor/dentist/vet that owns the practice, buying it from them entirely.

mhh__ 12d ago

PE staff are more intelligent and more shrewd than the people running the businesses they buy. Being a good doctor doesn't make you a good businessman. I'm not a huge fan of PE but the point of economics to deliver cheap and quality goods to consumers not keep people in a job. In healthcare in US in particular I think the main thing that capital should be (if regulators allow) boutique / specialists that e.g. are the best in the biz at doing MRI scans, in some states my understanding is that it's literally illegal to start a business aiming to make one small part of the process better.

cool_dude85 12d ago
What does it mean in this context to be more intelligent and shrewd than the existing owners? Delivering better profit margins?
- SoftTalker 12d ago
  I mean, losing money is not sustainable. If a doctor or physician group isn't business savvy and can't earn a profit they will eventually go under. That's not good for the patient.
  - cool_dude85 12d ago
    OK, but making money, though it may be less than a PE company would, is. Where do most doctor's offices fall?
    - csa 12d ago
      Most doctors make good money, but most who are good doctors could make much more. Simple example pitch that many general practitioners might consider using (based on local laws, of course): “Insurance covers C, Y, and Z. I can offer these additional services for A, B, and C that are not covered by insurance.” Where I live, you get a lot of this via “concierge doctors”, but that system can go far beyond basic concierge service, and people are willing to pay for top quality care.
- 12d ago

frisco 12d ago

Many new medical treatments/approaches involve heavy capex (robots, light and ion sources, imaging systems, etc) and removing private money that doesn't belong to individual physicians personally will suck a vast amount of capital out of healthcare, creating significant forces against innovation and deployment.

matteoraso 12d ago

PE exists because a lot of companies are poorly managed. It's better for your local hospital to be taken over by a PE firm than to go out of business. You can say that it would be even better if the government ran the hospital, and you would be right, but that would require a radical overhaul of the American healthcare system. Until that happens, PE plays a major role in keeping things working.

mmooss 12d ago
> It's better for your local hospital to be taken over by a PE firm than to go out of business. It's a false choice. The healthcare system has long dealt with and deal with that situation without private equity.
tremon 12d ago
> PE exists because a lot of companies are poorly managed. This is a non-sequitur. The existence of private equity has an effect on how companies are run, not the other way around. Many well-run companies are targeted by PE exactly because they're well-run and have carved out a sizable captive audience for themselves. And when PE takes over, said company usually ceases to be well-run on all metrics except one. PE exists because of the non-linear relationship between money accumulation and power. This effect means that it is more beneficial for any company to hoard capital as much as it can rather than "waste" it on the wider economy; after accumulating enough capital, the company can pivot away from whatever market it was in before and focus solely on asset management. PE mostly results from too low taxation on inert wealth compounded by zero-interest rate monetary policies.

Panzer04 12d ago

Easy to imagine practices where the primary owner is going to retire and looking for an out. Maybe they find a buyer in a doctor, maybe they don't, but PE provides them an exit that keeps the practice operating in the community. Many people don't really run businesses efficiently. There was an interesting video I saw recently where a sole doctor practice made a few changes to their workflow that allowed them to hire more doctors and handle 2x as many people - I would expect a PE firm would pursue similar changes that help increase the number of people they can service, increasing competitiveness and lowering prices in the long run. I don't know how these tradeoffs interact with patient care, but I wouldn't inherently expect PE to be worse at this than any other operating model.

maxerickson 12d ago
Lots of other efficiencies to look at. Tons of them are directly bad for the patient (capturing more of the surplus is an efficiency that businesses generally go hard at). Ultimately, I think the issue is when people making decisions are able to treat the impact as an abstraction.
markdown 12d ago
> and lowering prices in the long run. My sweet summer child...
sandeepkd 12d ago
A structure to run business efficiently using practiced methods is always a good thing. However from what little I have understood, the goal of Private Equity is to maximize the dollar value on their investment. Somehow they have settled with the playbook that running a business even profitably isn't the best idea. Instead its much more profitable to take over the struggling business at good price, squeeze everything possible from the assets (thats where PE seem to be investing their expertise unfortunately) over duration of time. Update the books in a manner that it saves money on taxes and carry forwards the loss, making money in the process.
- phkahler 12d ago
  My favorite is to sell the building(s) to their private real estate company and lease back. Then IPO the company and keep the rent coming on a 25 year lease.

w29UiIm2Xz 12d ago

These businesses would simply stop existing if no purchaser came forward. Many first-world economies face a demographic cliff where boomers are retiring and there is nobody in the next generation who can afford to take over the local dentist office, the HVAC company, etc.

HaloZero 12d ago
I don’t think that’s true though in all cases. Sometimes PE just offers more money passing the debt into the company they acquire. But smaller players would still take control.
Xirdus 12d ago
You are forgetting that if PE weren't there to buy out local dentist offices at a premium, then these offices would sell at far lower price, making them affordable to the next generation.
- deleted 12d ago
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tremon 12d ago
That's not a demographic cliff, that's a financial power cliff, and it's caused exactly by too much money being tied up in PE companies and offshore accounts. All that money taken out of the local economy is leaving each generation with an increasingly smaller size of the pie, even when the pie itself has been consistently growing. You even admit yourself that the problem is that the next generation "can't afford" to maintain the outgoing generation's standard of wealth.
underlipton 11d ago
It sounds like there's too much money in PE and not enough in the hands of young people. I'm told there is a secret ancient technique for rectifying such a situation.

tbrownaw 12d ago

> Can someone steelman private equity, please? Step back and look at what it fundamentally is. Person A has a business they want to sell. Person B has a pile of money and thinks that that business is (or can be) a good investment. That's it. So, what happens if person A is prohibited from selling their business? Are they forced to keep working because they don't have enough other savings to retire on? Do they shut the business down in order to retire? Something else? . Calls to ban private equity are attempts to play "shoot the messenger".

sandeepkd 12d ago
May be categorizing the different private equities can be helpful here. A PE interested and invested for growth is always the best outcome. A PE only looking to salvage and squeeze is that gives the bad branding to PE.
- 0xDEAFBEAD 12d ago
  It basically comes down to interest rates right? If interest rates are low, the discounted-cash-flows analysis will favor maximizing long-run profitability. If interest rates are high, you can do better by squeezing the business in the short term and placing the money you obtained into some sort of high-yield, low-risk investment vehicle.
  - sandeepkd 12d ago
    The positive argument about PE adding value is around efficiency of processes and scale. Interest rates can make a difference however in reality I doubt that it effects the outcome in most cases. Companies have already invested in staff with certain type of expertise and they are unlikely to change their plans or rehire based on the interest rates in short run.
    - works_at_pe 12d ago
      It's not always "efficiency". My PE is SaaS heavy portfolio. Pricing strategy, GTM, product roadmap; companies have rev, good moat, good customer base. But clear opportunity to grow rev. Many companies are held by original founders. Leadership teams in eng and product have been the same for a decade+; lacking exposure to how the industry is shifting. AI, for example, has slow adoption in some cases.

afavour 12d ago

Small(er) businesses can be poorly run. In theory private equity takes knowledge already in practise in other locations and shares it with this new location, improving results. Downside of course is that they care a lot less about that specific location than the previous owners would have. One specific practise I’d like to see banned is private equity buying companies with debt the company then assumes. It staggers me that it’s legal.

lazide 12d ago
I’ve literally never seen that happen. what does always happen is cutting ‘non essentials’ that are essential until the company implodes.
- ironSkillet 12d ago
  That is one of the core strategies in the private equity playbook.
  - 0xDEAFBEAD 12d ago
    Why would it be profitable for the company they just paid a lot of money to acquire to implode?
    - TylerE 12d ago
      They sell off everything of value before it implodes and cash out. THEN they let it implode with nothing but the debt remaining.
      - 0xDEAFBEAD 12d ago
        Why would banks lend to such an enterprise if they don't expect to get paid back?
        TylerE 12d ago

andsoitis 12d ago

> Can someone steelman private equity PE attacks organizational sclerosis, can save companies that otherwise slowly deteriorate, reallocates resources faster, creates an unusually powerful form of corporate governance, Debt can impose useful discipline, can provide capabilities that smaller companies couldn't build themselves. A society doesn't necessarily benefit from preserving every existing job. It benefits from creating increasingly productive jobs.

pixl97 12d ago
> increasingly productive jobs. This needs to be defined a little bit better. If I own a hospital that makes infinite money and every patient that comes to it dies the economy measures this is infinite productivity. This is contrived, but really matches some of what we see in real life. This is why making a measurement a target can be horrifically destructive and contrary to the actual goal society wants. The west doesn't seem to believe in the idea of social stability over increased profits which can lead to things like corporations being the social structure that is optimized for rather than the wellbeing of the individuals it contains. Left to run out of control the society can collapse.
- andsoitis 12d ago
  > If I own a hospital that makes infinite money and every patient that comes to it dies the economy measures this is infinite productivity. This is contrived, but really matches some of what we see in real life. You wouldn't have any business if all, or many, of your patients die.
  - AngryData 12d ago
    The history of government regulations mostly only being made in response to people dieing seems to refute that. If what you claimed is true, those businesses killing people would have gone under, rather than continuing until there is enough public outcry to regulate it.
  - metiscus 12d ago
    To be fair, in an emergency one does not usually get to choose the hospital they are taken to by the ambulance company.

toast0 12d ago

Private Equity allows an owner to sell their income generating but slowly dieing company for its value today. The company will keep operating for 3-5 years and then rapidly shutdown. This is valuable for business owners, because it gives them a way to get the value out of a failing business without having to ride it all the way into the ground. It's valuable for consumers because it provides locations to shop for halloween supplies.

snapplebobapple 12d ago

Pe is good when it is taking big risks on something new. That is hard so that is not what most pe does. Most pe is just figuring out ways to insert artificial inefficiencies into the system to syphon money off. Ie tax arbitrage, patent/copyright abuse, geographic or other market power abuse, etc. Basically find a way to move money around the system with no net benefit to society while having a bunch of it fall in your pocket is 90% of what pe does and its poison. The other 10% is vitally important to continued growth and prosperity and its often hard to tell which is happening until its over.

dghlsakjg 12d ago

Private equity just means controlling a company outside of the public stock markets, it is incredibly broad, and covers everything from blackrock buying every vets office in an area, to a plumber buying out another plumber when they want to retire. The steelman argument is that private equity is just property rights. If I build a business I get to decide what to do with it. What most people are arguing against is a specific kind of PE where an institutional investor will either use aggressive financial engineering to force a profit, even if it kills the business, or when those same investors aggregate market share to the point where it is detrimental to consumers. Sprinkle in a little bit of heartless MBA bullshit, and that is what people specifically don’t like.

caminante 12d ago
It is a broad term. VC is a subset of PE. In medicine, it's a solution for someone who wants liquidity (buy kids new home, help local dog shelter, add a new mistress) and doesn't want to retire, yet. The problem is that the terms are custom and YMMV as an existing patient of said practice.
holmesworcester 12d ago
A stronger steelman is that it results in resources getting allocated in smarter/healthier ways across society. If there's some business that's getting by but the land it's on is more valuable (e.g. for housing) than the business, some investors buy the business, sell the land, make the business account for the land value, wind the business down if it can't, and there are apartments there a few years later.
- dghlsakjg 12d ago
  Is that not just a subset of this: > The steelman argument is that private equity is just property rights. If I build a business I get to decide what to do with it.
viccis 12d ago
>If I build a business I get to decide what to do with it. I don't think that follows necessarily, especially not categorically.

DonsDiscountGas 12d ago

The most obvious answer is that freedom needs no justification, restrictions on freedom need a justification.

balderdash 12d ago

While not perhaps the best argument is the private equity provides liquidity for founders that want to exit. If you started business X, you’ve grown it for 20-40 years and you want to retire, selling is typically the answer. Let’s say the business makes $1m/yr after tax cash flow, PE might buy for $10m, besides PE there aren’t a bunch of likely buyers for your business (of course maybe there is a big competitor, and maybe you could sell it to an employee (but they probably don’t have the money and would need you to seller finance etc)). So for entrepreneurs with a successful small business (say $2-5m+ of ebitda) selling to private equity is the clearest path to a liquidity event for them.

whatsThisBtn4 12d ago

Historically we've seen capitalism be a good thing. Probably the biggest problem with medical is that it's incredibly regulated for the industry's benefit.

claytongulick 12d ago
I don't think I agree with this, most of the regulation I see is for patient protection. Stark, AKS, HIPPA, etc... are all strong regulation aimed at protecting individuals. From fee-splitting prohibitions to FDA regulated medical devices, almost all of the day to day regulations I've dealt with in healthcare are squarely aimed at ensuring safety, protecting privacy, preventing fraud and controlling costs.

czhu12 12d ago

The economist did a piece in defense of private equity a few months ago. Basically boils down to more efficient resource allocation across an entire economy, deep pools of capital to rapidly transform businesses into things people want to buy from. Gift link: https://www.economist.com/podcasts/2026/02/19/a-love-letter-to-private-equity?giftId=NmVmNzZjODctZjEzMy00MjVjLThmODktZDUyMmExZDMyNjFl&utm_campaign=gifted_article https://www.economist.com/podcasts/2026/02/19/a-love-letter-...

cyberax 12d ago
The thing is, we're now learning that efficient resource allocation in the short run is not necessarily what we want in the long run.

havaloc 12d ago

I live in a small midwest market, and all the landscaping companies are locally owned and awful. PE bought two of them, combined them into one, and now they, at about the same cost, do what they say they are going to do, answer the phone, hire competent people, and do a good job. Likewise, PE has bought up most of the local plumbing and HVAC, and that's been a bit of a bummer, and gotten more expensive, but if you need someone right now, they are there (and answer the phone, etc), as opposed to the local concern who may be on vacation and can get back to you in 2 weeks. There are some really good local small businesses/trades people, but like the 1950s, in a lot of aspects they are overly romanticized.

ChickeNES 12d ago
My controversial opinion: chains/large businesses are more convenient, cheaper, better (and more consistent) service, and the big one: you can complain up the chain when a local branch/franchise fucks up vs dealing with a sole proprietor. There's plenty of small businesses I do value (thrift stores, bodegas, etc), but for services? The choice is obvious.

joshjkim 12d ago

At a general level, PE (and really much of capitalism generally) is built around the idea that financial efficiency should be the guiding principle re: capital allocation, so the steelman argument is that PE takes financially inefficient businesses, makes them more financially efficient, and that is good because that's the best way to allocate capital. a financially inefficient business may be a business that employs more people than it absolutely needs, a business that treats customers/vendors more generously than it absolutely needs to, or even a business that exists as a going concern that would be more financially efficient if sold off for parts or went into bankruptcy. i personally don't believe financial efficiency should be the guiding principle for everything or really anything, and I believe as a society we should account more for non-financial efficiencies (like treating human beings generously and kindly), and I think it's fine for an inefficient business to continue existing if that means more people have jobs for longer or customers/vendors are treated more generously. fundamentally, i think this line of thinking is dehumanizing, as it views the world (humans, nature, information, knowledge etc.) as resources/materials and not much else. that all being said, i at least understand the principles and the materialist idea that everything can be viewed as material/resource and why people pursue them (esp because pursuing them effectively can make you fabulously wealthy). i often say when talking about this stuff with friends: if you're willing/able to see everything (including/especially people) as resource/material, you're well positioned to obtain a lot of material resources/material. whether that's a good thing for you or the rest of the world is another question (and my view is that it's straight up bad).

deleted 12d ago

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