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Private equity is buying everything from vet offices to tech conglomerates

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

#101

Post by snapetom »

briandoll wrote: post #79

A friend of mine is a Vet at a place recently sold to a PE firm. If your wait times are crazy long, if you can't get through on a phone, if you realize your vet's office has parted ways with the great vet you used to see -- that's the PE firm counting beans and destroying the service for customers in an effort to squeeze every dollar out of the system. As a specific obviously bad example -- Vet services in California…

My wife is a vet for a corporate owned hospital and our circle of friends are naturally very vet centric. They run the gamut from PE vets, corp vets, and private owners. We know GPS, specialists, dogs and cats only, large animal, exotics. What you are describing is not PE specific.

Staffing issues, primarily technicians, have hit everyone across the board. It’s a combination of wages, training, quality of life. Moreover, COVID caused a dramatic demand in vet services but protocols decreased the amount of patients seen. Only now is there starting to be some relief on that. Maybe PE reacted in a way that was not the wisest in your friend’s opinion, but everyone scrambled and few succeeded.

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

#102

Post by twiddling »

fnimick wrote: post #96
andix wrote: post #28

Earlier quoted context omitted.

Was it at least a good deal for the founder? I feel your pain about what happened. I've seen comparable things a few times first hand. My learning was: just leave once the change starts, only stay if you're getting something out of it. It's not my company, I'm only in charge of my life, I'll find something better soon. I think I would not recommend to run once PE is mentioned, it can also change for the better, but i…

> Was it at least a good deal for the founder? This doesn't make it any better for the, you know, entire rest of the company. It's important to remember that this startup industry relies on selling dreams to idealistic young grads who will usually end up under the bus while the higher-ups walk away with the profit, if there is any. And a lot of us here are complicit, because we rely on cheap labor and false promises…

It's strictly business. You keep your CV up to date and move on.

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

#103

Post by majormajor »

dmix wrote: post #89
eli wrote: post #85

Earlier quoted context omitted.

PE acquired us and was a great partner. Allowed us to do larger M&A deals than we otherwise could have. Supportive but mostly stayed out of the way. Never suggested any cuts or anything that would impact culture. Ultimately led to us being acquired by a strategic a few years later in what I think was a good outcome for everyone. These are all just anecdotes. My experience doesn't override yours, but I'd be careful dr…

If PE ruined more businesses than it helped then people wouldn’t be doing PE (either the finance guys or the companies). So technically there should be more wins than not. At least on paper. How that looks for lower level employees may be different but often PE is there for a reason.

Eh, you'd expect that trend to take something like decades to fully percolate and result in behavioral change, if ever.

You could apply your first sentence pretty directly to MLMs, for instance.

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

#104

Post by legitster »

Dwolb wrote: post #80
legitster wrote: post #40

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…

Agreed. 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.

Another thing to keep in mind is that it was a completely different regulatory environment when most of these private practices started. 50 years ago you could run a cash business with yourself, a receptionist, and a nurse. Incumbent practices could keep up with the times and add billing staff, but you would have to be insane to start a new practice today.

I'm all for healthcare reforms, but it's a pity that we didn't pursue a simple voucher or cash-based system over our insanely complex system.

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

#105

Post by tiedieconderoga »

legitster wrote: post #92
dwallin wrote: post #59

Earlier quoted context omitted.

"there is no one else right now who would buy it." You are missing a qualifier: "at the current market price." If you prevent or disincentivize PE from buying these types of businesses, the price would drop to the level of its new adjusted demand.

Sure! But that cuts into the "keeping retiring doctors happy" piece. If your practice is worth $15 million but you only get 50c on the dollar because there is no buyer pool, you might be pretty grumpy. To the broader picture though, this is a double edged sword if you want more private family practices. Less doctors are going to go through the work and cost of starting their own business if they have to take a haircu…

If you remove the premium offered by people who just want to scrap the business for parts, and no prospective owners can afford it at your target price, is the business actually worth that much as a going concern?

It sounds to me like your hypothetical doctor might actually be upset that they can't get $2 on the dollar by selling to an unscrupulous party. You could view the PE premium as a way for the good doctor to benefit twice from all the tax benefits that they accrued over the years as incentives to keep their business around.

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

#106

Post by Aunche »

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…

Sorry, but you have no idea what you're talking about. There's no way debt from a leveraged buyout is going to be rated anywhere close to AAA. The leveraged buyouts of Twitter and Toy's R Us were funded by junk bonds.

https://www.bloomberg.com/news/articles/2022-10-31/twitter-s....

https://www.moodys.com/credit-ratings/Toys-R-US-Inc-Old-cred...

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

#107

Post by mucle6 »

paxys wrote: post #83
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…

If the business is (seemingly) on the path to death and current owners are done with it, but employees still want to stay, then the obvious best outcome for the business is to be handed over to the employees. The downside is that there's less money in that for the shareholders and the PE fund, but let's not try to change the narrative to "PE buyouts are best for the business" when they clearly aren't. They are a way…

This assumes that the current company has no valuation, or the current employees can fund a purchase. And it assume that the employees are more apt to run the company than PE

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

#108

Post by icelancer »

mbesto wrote: post #88
eli wrote: post #85

Earlier quoted context omitted.

PE acquired us and was a great partner. Allowed us to do larger M&A deals than we otherwise could have. Supportive but mostly stayed out of the way. Never suggested any cuts or anything that would impact culture. Ultimately led to us being acquired by a strategic a few years later in what I think was a good outcome for everyone. These are all just anecdotes. My experience doesn't override yours, but I'd be careful dr…

My firm supports 100's of PE acquisitions every year and I can tell you that your experience is far more the norm than what the parent comment has suggested.

The idea that PE comes in and sets eight figures of their own money on fire and ruins a business, shooting themselves in the foot makes no sense, yet every other story online is about them doing exactly that.

Of course there are LBO scams going on (more historically rather than currently) but these billion dollar firms don't come in and lose a ton of their own money along with money of their outside investors on a regular basis.

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

#110

Post by snapetom »

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…

I am inadvertently part of a PE cleanup, being a PM hired by a guy PE brought in.

I am of the opinion if PE destroyed this company’s culture and strip/sell it off, it’s certainly deserves it and will be better for everyone involved.

This place worked for decades as a cost center. It never made money, routinely losing $10-$40 million a year. Multimillion dollar deals were negotiated and made with handshakes, biting is in the ass. The engineers spent their time making shit, over engineered products with no regards to the little customers we had. Our suite of products have no interoperability. Just last week i again repeated why to a couple of “top engineers” why having single sign on across Our products makes a good customer experience.

PE is a tech boogeyman here on HN and Reddit. But now I wholeheartedly believe that’s Sometimes PE needs to come in and shut things down.

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