HellsMaddy
13 hours ago
Private equity seems to be a form of cancer that slowly sucks the life out of everything it touches, with a single goal: to grow and spread. Can someone more knowledgeable please explain to me why I'm wrong?
nzeid
13 hours ago
The reason it's easy to conclude that they're evil is because they are almost never committed to preserving or improving the quality of their investees. They are only committed to making money, and that often comes in the form of price gouging and liquidation.
dgrin91
13 hours ago
(not my views, playing devils advocate)
PE strives to make things more efficient from a capital point of view. Business foois making $X in profit, and the PE firm's analysis says the can make X+Y dollars with some changes. This is 'better' because now the capital usage is more efficient and more can be spent in other places - new products, new jobs, new businesses, returns to investors, etc. And of course returns to the PE firm.
In principle an efficient economy is important on a macro scale - if all the business are stuck in how they were doing things 30 years ago then we would have reduced innovation and ultimately less jobs.
In practice there is of course a lot of money that flows back into the PE boss's pockets and.... thats it.
freetanga
13 hours ago
Have you seen “Other peoples money” with Danny de Vito? I felt it explains this cancer quite well, 35 years ago.
rpjt
13 hours ago
Efficiency?
nine_k
13 hours ago
The classic playbook includes making a lot of debt, and then leaving the lenders holding the bag when the company files for bankruptcy. It can only be considered efficient if con artistry is efficient, that is, efficient at taking the money from the hands of people who trust other people "too much".
dgrin91
12 hours ago
This is over simplistic and if everyone knew this is what happens when PE comes into play then no one would lend to PE-backed companies. Often times these debts can work out.
queenkjuul
9 hours ago
Work out for the banks and shareholders yeah. Not the company and its employees