2 ms·

These PE-owned companies create market demand by being shitty. Somehow they are able to keep their margins and their market so that their business model makes s

These PE-owned companies create market demand by being shitty. Somehow they are able to keep their margins and their market so that their business model makes sense. That's a puzzle, right? There is no shortage of investment looking for great returns. A market with huge demand not being met adequately is a dream to investors. Even more when you know the competition must continue to fuck their customers because they paid above market rates for the purchase and the business is saddled with debt obligations it must meet (Leveraged buyouts do that). What could stop new competition from beating them out? It's not capital.

what-the-grump 12d ago
It is capital? It’s going to the same PEs and private markets. Who the hell is going to take the risk on and for what? Take x billon dollars to build from scratch or near guaranteed profit to buy 50 practices and shittify them for near guaranteed profit. Show me an example of trend reversal please of this happening in any sector. These are essentials and basics and they are captured, this isn’t a froyo start up that has a 3 year cycle.
duped 12d ago
PE doesn't create anything. They extract from margins. It only works by having more capital to begin with. Otherwise you wouldn't see consolidation where it shouldn't exist.
- throwaway13337 12d ago
  I think I could have been clearer. The PE firm creates market demand for the goods/services that the purchased company used to provide at a better value to the customer. So yes, the 'creation' is a demand which is sort of a destruction of the value that the customers previously had. In a fair market, this demand can be met. But a PE buys strategically such that this demand is not possible to satisfy because the company they purchased is entrenched in some way (regulation/monopoly).

2 ms·

These PE-owned companies create market demand by being shitty. Somehow they are able to keep their margins and their market so that their business model makes s

by throwaway13337 12d ago

what-the-grump 12d ago
It is capital? It’s going to the same PEs and private markets. Who the hell is going to take the risk on and for what? Take x billon dollars to build from scratch or near guaranteed profit to buy 50 practices and shittify them for near guaranteed profit. Show me an example of trend reversal please of this happening in any sector. These are essentials and basics and they are captured, this isn’t a froyo start up that has a 3 year cycle.
duped 12d ago
PE doesn't create anything. They extract from margins. It only works by having more capital to begin with. Otherwise you wouldn't see consolidation where it shouldn't exist.
- throwaway13337 12d ago
  I think I could have been clearer. The PE firm creates market demand for the goods/services that the purchased company used to provide at a better value to the customer. So yes, the 'creation' is a demand which is sort of a destruction of the value that the customers previously had. In a fair market, this demand can be met. But a PE buys strategically such that this demand is not possible to satisfy because the company they purchased is entrenched in some way (regulation/monopoly).