Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Private equity is buying everything from vet offices to tech conglomerates

theverge.com

Post reply on HN
Print view View original

61–70 of 362 posts

Re: Private equity is buying everything from vet offices to tech conglomerates

#61

Post by enlyth »

SNosTrAnDbLe wrote: post #5

I have firsthand experience of how PE ruins startups. We were a small startup and unfortunately our founder decided to go with a PE firm rather than a VC firm for a round of funding. The latter were upfront about job cuts but the PE firm did not say anything until them took over. The founder got a good paycheck but we were left holding the bag. There was a bloodbath and they ruined the culture, the product and the mo…

It's not all black and white, at least from my experience

A similar thing to what you described happened at a software company where I used to work at, culture destroyed, many people let go. I will name and shame the PE firm - it was Hg Capital

However currently, I've been at a company for a few years who is owned by Morgan Stanley Capital Partners, and it's a completely different story. The culture is great and hasn't changed at all

Re: Private equity is buying everything from vet offices to tech conglomerates

#62

Post by hotpotamus »

SN76477 wrote: post #35
addflip wrote: post #7

It's a shame what's happened to my local HVAC contractor. It used to be a great local operation where a real person picked up when you called. But lately, after a private equity group took over, it's all automated calls and foreign call centers. The personal touch is gone and, sadly, their service quality has taken a noticeable hit. It's just not the same anymore.

A few years back I had to run door dash orders to pay the bills. I noticed then that distribution of labor removes a lot of the spirit and purpose behind the work. No one at the call center is enjoying the satisfaction of a job well done, it is complete detached. I'm sure the laborers are pushed hard to high quotas and have zero time to follow up with customers. I think we need to back to owning the entire system if…

Easy there comrade, you need to watch that talk about alienation of labor and ownership of the means of production. But it is interesting how a brief trip through the gig economy will start someone talking like Marx even if they (presumably) haven't read him.

Re: Private equity is buying everything from vet offices to tech conglomerates

#63

Post by gibspaulding »

jarym wrote: post #51

Not just in the US either - in the UK my local gym (part of a national chain) that I've been with for over a decade got bought by a PE firm. In 18 months the fees went up over 60%. They used to give out regular guest passes - now only 1-2 passes once a year and they're valid for less time than they used to be. They've also doubled the charges for bringing a guest. All these price increases and while the staff are sti…

The PE firm has managed to charge more, clean less, AND bring in enough customers that the gym is overcrowded?

I'd be looking elsewhere too, but from a business perspective that sounds like a roaring success.

Re: Private equity is buying everything from vet offices to tech conglomerates

#64

Post by lapcat »

Some highlights (lowlights?) of the interview:

> the model is that often businesses that service working-class people are attractive because poorer customers don’t have alternatives, so you can raise prices, you can cut quality care

> Private equity firms have donated something like $900 million since 1990 to federal candidates. They have a bench of employees that include former cabinet members, secretaries of state, treasury, defense, chairman of the FCC, SEC.

> it’s almost impossible for a private equity firm to be held legally responsible under common law veil-piercing arguments

> They executed a sale-leaseback, which means they sold the underlying assets of the nursing home chain and had the chain lease it back for a quick hit of money, but now they’ve got a long-term obligation. They executed what’s called a dividend recapitalization, so ManorCare had to borrow money to pay Carlyle and the other investors a profit.

Re: Private equity is buying everything from vet offices to tech conglomerates

#65

Post by thedangler »

Don't forget the amazing track record of BCG leading companies into bankruptcy. Yes BCG consulted for Toy's R Us. Maybe there is more too it...

There is a conspiracy theory BCG is tied to SHF to lead companies into bankruptcy with help of negative news narratives and help from MM to internalize buy orders and place sell orders on lit markets driving stock prices down.

No concrete evidence yet but who knows when all they get is a fine and it's business as usual.

BCG also consulted for:

Blockbuster

OfficeMax

Pizza Hut

KLM Air France

K-Mart

Neiman Marcus

Pier 1 Imports

Sears

Toys R Us

Circuit City

JC Penny

Radio Shack

Texaco

Chrysler

MF Global

Conseco Inc.

CIT Group

GM

WorldCom

Washington Mutual

Lehman Brothers

GameStop - Fired avoided bankruptcy

PulteGroup - Fired and avoided bankruptcy.

Re: Private equity is buying everything from vet offices to tech conglomerates

#66

Post by KerrAvon »

bequanna wrote: post #42
bena wrote: post #27

Earlier quoted context omitted.

So you're saying that technically , it isn't what it looks like it is. That technically , TRU is buying itself. That technically KKR isn't actually the new owner. Technically, it's still predatory.

The business isn’t “buying itself” any more than a house does when you purchase it. The debt is just placed against the assets (real assets and cash flow). The business has owners. It doesn’t “own itself”. I don’t think it is predatory at all. A leveraged buyout is a pretty fundamental and common strategy across all business types and sizes. Don’t hate the strategy of buying a business with debt, hate the players tha…

It's literally the legality of the strategy that enables the players to behave like assholes in this particular incredibly destructive way. The use of debt financing needs to be made illegal or have stronger constraints, for the health of the country in general.

Re: Private equity is buying everything from vet offices to tech conglomerates

#67

Post by KerrAvon »

S_A_P wrote: post #6

I don't know the answer here, so Im asking hoping that someone may. Couldn't private equity be seen as the "ants" of the economic landscape? Scraping the skeleton companies of the world for the last bits of meat on the bone and then move on to the next?

No -- the companies in question aren't usually basket cases -- if they were, they wouldn't have the assets to make the PE takeover profitable in the first place. In most cases, they're growing at a fine, steady rate, or even better. It's just whatever the PE vultures can get away with.

Re: Private equity is buying everything from vet offices to tech conglomerates

#68

Post by curiousllama »

enlyth wrote: post #61
SNosTrAnDbLe wrote: post #5

I have firsthand experience of how PE ruins startups. We were a small startup and unfortunately our founder decided to go with a PE firm rather than a VC firm for a round of funding. The latter were upfront about job cuts but the PE firm did not say anything until them took over. The founder got a good paycheck but we were left holding the bag. There was a bloodbath and they ruined the culture, the product and the mo…

It's not all black and white, at least from my experience A similar thing to what you described happened at a software company where I used to work at, culture destroyed, many people let go. I will name and shame the PE firm - it was Hg Capital However currently, I've been at a company for a few years who is owned by Morgan Stanley Capital Partners, and it's a completely different story. The culture is great and hasn…

It REALLY matters what kind of PE you’re talking about.

Bought by a growth equity fund? Probably fine. Bought as part of a roll up? Probably screwed.

PE is like tech: similar tools, but very different firms.

Re: Private equity is buying everything from vet offices to tech conglomerates

#69

Post by Invictus0 »

linuxftw wrote: post #56
toast0 wrote: post #43

Private equity leveraged buyouts are an option for companies to change their fate. Typically, they're on a long path towards an slow death. With the buyout, current shareholders get a return, and the company is on a 3-7 year path towards a crisis bankruptcy. It's good for the current shareholders, and it's good for the private equity company. It's not good for the business, but if the old owners and the new owners li…

The problem lies in where the money comes from the execute taking the company private. A big bank will issue the debt, then peddle the debt as AAA rated into all of America's 401k's via their friends at the brokerages. You think the banks are just sitting on those debts hoping to make it to maturity? And it's never the PE firm that owes the debt, they're able to get paid back by the thing they buy, and that shell owe…

You think the banks are so stupid that they just let PE firms saddle them with a bunch of debt and walk away? Bank PE loans are almost always senior loans, meaning the loan has to be completely repaid before you can start distributing dividends.

Re: Private equity is buying everything from vet offices to tech conglomerates

#70

Post by monnok »

letsdothisagain wrote: post #30

PE is just a rebrand of Corporate Raiders. The fact that this worked is a testament to just how much of our media is directly controlled by Wall St.

I sold my house to PE. I work for a conglomerate that was captured by a vulture capitalist and immediately flipped to PE. I’ve been thinking a lot about PE.

I think PE is this decade’s banks bailout. Bank balance sheets were severely unhealthy in the face of fixed rate loans and skyrocketing inflation. Easy credit was eagerly extended to anyone crooked enough take on variable rates and capture real assets.

The LLCs that the smart firms financed for their small captures (like houses) are going bankrupt while the revenue they booked is already packaged into REITs and held by corporations as part of their supposed inflation hedges (or timebombs).

Meanwhile, the reckless PEs owning multiple corporations are either going to flip them to international bag holders, or drown under the operating costs of servicing 100% debt-financed equity themselves.

When catastrophe comes, and bagholders go under, rotten assets will revert to the banks… and taxpayers will bailout the banks to protect hundreds of PE-owned corporations and thousands of “innocent” corporations saddled with toxic REIT-backed instruments and each other’s default swaps.

All of which means, if you were priced out of a home in the last three years, it might have been your future tax paying self who outbid you… on behalf of the banks who will indirectly own that home.

Post reply on HN