71–80 of 362 posts
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…
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…
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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.
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…
PE usually doesn't have any special connection to your sector or community. They just buy stuff and try to run it according to bog standard MBA rules.
Well, to be fair, doctors sold themselves out. In New Jersey and New York City, I have to explicitly state that I only want to meet with an MD and not an assistant physician or nurse practitioner. As to how this is even legal is probably explained by insurance company lobbying efforts for cost control.
That hasn't been quite my experience. I've used PAs/NPs when it was appropriate (annual physical, etc) - I don't need an MD to take a blood sample, run a blood pressure check, and read of a standard checklist of questions. And I've seen MDs when that was appropriate (specialist procedures, things that aren't "a cold", etc). There's room for both.
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.
The worst "foreign call center" experience I've had lately... Hotel check-in. Walked in, lady at desk is read a novel, I ask "can I check in?", she directs me to a video-conference kiosk across the room, which is actively in-use by a high-maintenance customer who, in addition to changing her reservation details, can't understand a fairly light Indian accent. 15 minutes of waiting later, this other customer is still g…
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I mostly agree with this. I would say a lot of what is wrong with America is that corporation laws allow this kind of thing. There are other ways. Nobody thinks Germany is an economic backwater and they require, I believe in large companies, for employees to have a role in the management of the company [1]. There are also co-ops like the Mondragon Coop in Spain[2]. Some states have co-op laws but are mostly used by f…
What I know about PE firms in Europe, they mostly operate the same way as in the US. There are plenty of PE firms and in general to me it feels like they are more popular here than US actually, as with LP's they are perceived as lower risk. What I don't understand from the article, is how the PE firm is able to shift the debt from the buyer to the firm. That shouldn't be possible in any jurisdiction I know a little b…
There are many such cases. The book in the article "Barbarians at the Gate" was probably the most famous instance until AOL took over Time Warner.
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…
A major difference is that VCs (good ones at least) specialize in startups in a given sector and have some understanding of the sector, the product, the market landscape, the culture, etc. They also operate in that sector long term which means they really want to maintain a decent reputation among founders, employees, and even customers. VCs really don't want to get their name associated with "OMG run away!" since it…
I know you said usually, but it really does depend. Thoma Bravo would be an example of one that is tech sector focused. Not that I like TB, just saying that doesn't always apply.
As a specific obviously bad example -- Vet services in California are kinda seasonal. More visits in summer than winter, due to more time outdoors, etc. A PE firm looked at visits on a weekly basis and saw a downward trend in the winter and decided to re-set staffing based on that. Now that summer has arrived they are severely short staffed, have parted ways with great vets, and now wait times are horrific.
Thanks PE!
Despite the directions the interviewer tried steering this conversation into, this is a really interesting interview. But when it comes to the private equity roll-ups, I think everyone is missing the forest for the trees. If you are a doctor looking to retire and sell your business there is no one else right now who would buy it . The same goes for every category of "mom and pop" business in the US. Even if you could…
Had a family member receive an LOI at 10x EBITDA so they decided to sell (not sure where they closed).
They mentioned that if a doctor would have purchased the practice, it would be 1x or 2x at best.
Related: they would have been interested to scale up, but didn't know how and were afraid of the complexity of trying to manage a 3rd location.