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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

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 15d 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 15d 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 15d 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.
- Xirdus 15d ago
  When interest rates are low, it's most profitable to invest in extremely high risk, extremely high reward unicorn startups. That makes way more money on average than any long-run profitability. In fact, long-run profitability is basically never the most efficient use of money regardless of market conditions.
TylerE 15d ago
Why does everything have to be obsessed with growth? Especially with practically every (first world, at least) country having a birth rate well below replacement.
- lotsofpulp 15d ago
  Because everyone promised themselves a lot of benefits in old age that they want someone else to provide them.
- nradov 15d ago
  Not all businesses are obsessed with growth. Many mature businesses are managed for value rather than growth and focus on returning profits to shareholders through dividends or stock buybacks.
works_at_pe 15d ago
> A PE interested and invested for growth is always the best outcome. (Throwaway) I work at a top ~10 PE. This is what we do. One portfolio company has a product on old tech. We bring in a product team, a CTO, internal tech teams. Help shape a roadmap to tackle the most egregious tech and product debt so teams can move faster. Fix non-existent or outdated pricing strategy that has not evolved with the industry. Fix, grow, or evolve GTM to reach new customers. Help bring fresh leadership resources in when needed. Industry is typically "boring" and systems are valuable, but aging. We invest, modernize, and try to grow new rev streams, new customers. Portfolio is SaaS focused (can't speak for those that invest in real estate and healthcare). The employees of the PE also co-invest so everyone is aligned to help the portfolio companies grow and exit. This is a multiyear process.
- sandeepkd 15d ago
  Naming couple companies that you acquired for whom you changed the trajectory would be a lot stronger signal without revealing your identity. On side note, its rare to see anyone fixing the old tech, its hard to fix, needs a different kind of talent thats hard to hire for the PE money. The folks who can understand some one else's decade old code and run their imagination through all the possible assumptions or trade off that might have been made in code/system are rare to find. Finding new customers, finding more things to sell, finding synergies with other items in your portfolio, increasing the price for existing products are more realistic.
  - works_at_pe 15d ago
    We have portfolio level CTOs that specialize in this playbook. Fixing the tech means many things. Many companies don't even have CI (forget CD). Some have really broken processes and handoffs between teams. And yes, some are running COBOL backends. Sorry, naming a portfolio company would reveal the PE.
- bruce511 15d ago
  I'm going to side-track a bit, but since I'm being courted by PE I thought I'd ask. >> The employees of the PE also co-invest Is this voluntary, or mandatory? I ask because I've seen clauses along the lines of "75% of bonuses are paid in shares, not available for sale for 5 years." Using bonus money to buy shares props up the share price, but delays the employee actually seeing the bonus for 5 years. Seems pretty win-lose to me, and kinda puts me off. Is this a standard practice you mean by co-invest? (As an aside, I'm not a fan of buying shares where I work, that's not a good portfolio-diversification model. If the business goes under it's not good to lose both your job, and investments, on the same day.)

0xDEAFBEAD 15d 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 15d 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 15d 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.
Xirdus 15d ago
When interest rates are low, it's most profitable to invest in extremely high risk, extremely high reward unicorn startups. That makes way more money on average than any long-run profitability. In fact, long-run profitability is basically never the most efficient use of money regardless of market conditions.

TylerE 15d ago

Why does everything have to be obsessed with growth? Especially with practically every (first world, at least) country having a birth rate well below replacement.

lotsofpulp 15d ago
Because everyone promised themselves a lot of benefits in old age that they want someone else to provide them.
nradov 15d ago
Not all businesses are obsessed with growth. Many mature businesses are managed for value rather than growth and focus on returning profits to shareholders through dividends or stock buybacks.

works_at_pe 15d ago

> A PE interested and invested for growth is always the best outcome. (Throwaway) I work at a top ~10 PE. This is what we do. One portfolio company has a product on old tech. We bring in a product team, a CTO, internal tech teams. Help shape a roadmap to tackle the most egregious tech and product debt so teams can move faster. Fix non-existent or outdated pricing strategy that has not evolved with the industry. Fix, grow, or evolve GTM to reach new customers. Help bring fresh leadership resources in when needed. Industry is typically "boring" and systems are valuable, but aging. We invest, modernize, and try to grow new rev streams, new customers. Portfolio is SaaS focused (can't speak for those that invest in real estate and healthcare). The employees of the PE also co-invest so everyone is aligned to help the portfolio companies grow and exit. This is a multiyear process.

sandeepkd 15d ago
Naming couple companies that you acquired for whom you changed the trajectory would be a lot stronger signal without revealing your identity. On side note, its rare to see anyone fixing the old tech, its hard to fix, needs a different kind of talent thats hard to hire for the PE money. The folks who can understand some one else's decade old code and run their imagination through all the possible assumptions or trade off that might have been made in code/system are rare to find. Finding new customers, finding more things to sell, finding synergies with other items in your portfolio, increasing the price for existing products are more realistic.
- works_at_pe 15d ago
  We have portfolio level CTOs that specialize in this playbook. Fixing the tech means many things. Many companies don't even have CI (forget CD). Some have really broken processes and handoffs between teams. And yes, some are running COBOL backends. Sorry, naming a portfolio company would reveal the PE.
bruce511 15d ago
I'm going to side-track a bit, but since I'm being courted by PE I thought I'd ask. >> The employees of the PE also co-invest Is this voluntary, or mandatory? I ask because I've seen clauses along the lines of "75% of bonuses are paid in shares, not available for sale for 5 years." Using bonus money to buy shares props up the share price, but delays the employee actually seeing the bonus for 5 years. Seems pretty win-lose to me, and kinda puts me off. Is this a standard practice you mean by co-invest? (As an aside, I'm not a fan of buying shares where I work, that's not a good portfolio-diversification model. If the business goes under it's not good to lose both your job, and investments, on the same day.)