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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

#261

Post by greesil »

ahzhou wrote: post #140
coastermug wrote: post #125

Earlier quoted context omitted.

Thank you, this is a balanced and detailed response. I don’t personally “buy” the narrative that all LBOs are destructive. After all there are entire funds devoted to LBOs and how would these PE outfits carry on getting loans if their companies constantly defaulted?

Thats right. At the end of the day, PE investors need to make their returns and blow-ups like Toys-R-Us did not make good returns. That said, there are systematic problems with the incentives involved. 1. PE investors tend to be VERY financially savvy, but sell to less skilled investors. If they see that they have the chance to sell one of their assets at a great price, they don't have any issue with anyone holding t…

I'm very interested to see what's going to happen to private equity now that interest rates are above zero. At the very least I have to imagine some of the loony schemes like buying up houses are going to stall.

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

#262

Post by IG_Semmelweiss »

JumpCrisscross wrote: post #136

I have a pet theory: there are managerially-minded university graduates who value prestige more than power or pay. In the post-War era, they became beige-suited company men. In my generation, they went corporate finance. Today, they work for private equity. Banking was great. Everyone–from liberal arts to engineering majors–could putz around for years in a pre-defined and prestigious path with moderately above-market…

This is spot on, but its missing a few important aspects:

Banking used to be a boring, low paying profession. PE was basically non-existent. The whole of banking and Private Equity fire machine has been fed by 2 factors that were absent ~50 years ago:

1) ultralow interest rates for extended periods of time 2) de-risking of hubris via bailouts (most recent case: SVB). 3) Regulation creep. If you look at the industries where PEs are investing heavily, its not where competition is fiercest, but instead they look for captive markets, particularly those with licensing requirements (Like healthcare). Its easier to buy into a company when competition is not likely to show up organically next door.

If you take that secret sauce off the dish, you can't quite cook the stuff that we have going on today.

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

#263

Post by nine_k »

0xBABAD00C wrote: post #236
JohnFen wrote: post #188

Earlier quoted context omitted.

> Prestige is a powerful motivator. I know this to be true because I've seen so many people given BS titles instead of raises and be happy about it as if they got something of real value. But I don't understand it at all. Apparently, I lack the "prestige" gene.

Well, you can ask yourself what is "real value". In fact, more likely than not, it's just some imaginary stuff you ascribe value to, just like "prestige".

Real value is something that can pay your bills :)

Sometimes prestige does it, too, e.g. when you're hired to a better position on a next job, due to your prestigious title, a part in a famous project, etc.

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

#264

Post by IG_Semmelweiss »

snapetom wrote: post #258
pc86 wrote: post #144

Earlier quoted context omitted.

I dated a vet tech several years before COVID and it sounded like a horrendous job. $20/hr was considered good pay, you're constantly bending over, pickup up things (sometimes things that definitively do not to get picked up), and you're literally dealing with some of the shittiest parts of animal care.

I would add that vet techs in many states (most maybe?) are licensed and require training in associate degree programs. Most these days have bachelor's and I've even known someone with a master's who volunteered in ecological research projects in her spare time. So yeah, with $20/hour imagine having a college degree and making $42k/year. Veterinary care up and down, including for veterinarians, is a field that is rea…

That may be at the hourly wage level, but from office manager to above, including specialists, they are making money.

Much more so in states where regulation is strict for said jobs

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

#265

Post by motohagiography »

maximinus_thrax wrote: post #231
motohagiography wrote: post #17

I've turned down interviews with several companies after finding out they were PE managed. If you need the job take it, but otherwise find something with hope. After looking them up on crunchbase or the public filings, a decline on sight policy on PE owned companies has saved me a lot of time and, I think, career suffering.

Very curious how you conduct the research. I'm legitimately interested as at some point I almost accepted an offer from a company and one of my friends stopped me telling me that they're PE managed. Is there an easy systematic way of finding out without having to read public filings? How do you decide? Based on the ownership shares? Board members?

What's hard about reading filings that are literally public? The only barrier is english literacy, a solved problem. Crunchbase tells you any public funding rounds, and then if a PE group acquires more than something like 10% they have to make an SEC filing. (if I'm wrong about that threshold, the internet will correct me.)

I should disclose that early in my career I would do job interviews recreationally on my lunch hours just to get good at them, so it's not reasonable to just use what I say as a reference, and I've done serious reading and practice on negotiation theory and a bunch of other business topics, so essentially, I look at companies like an investor when I decide to work for them. Part of that is getting a sense of what their cap table probably looks like, because that drives the incentives in the product and organization. If you need a job, take what's available, but if you are serious, look at how startups necessarily survive as a function of their runway and board structure. Brad Feld's "Venture Deals" is a good reference, as is YC's startup school library (all free online) and then maybe Jeffery Pfeffer, then DeMesquita and Smith. Then understand how your own skills get them through the incentive structures described in those books. PE creates a set of incentives in an organization that are orthogonal to startup growth, they're just different types of companies. Once you know the board structure and the cap table, the survival of every company flows from the incentives that creates, imo.

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

#266

Post by Spooky23 »

JumpCrisscross wrote: post #136

I have a pet theory: there are managerially-minded university graduates who value prestige more than power or pay. In the post-War era, they became beige-suited company men. In my generation, they went corporate finance. Today, they work for private equity. Banking was great. Everyone–from liberal arts to engineering majors–could putz around for years in a pre-defined and prestigious path with moderately above-market…

There’s an intense expectation placed on these folks. If dad was a rockstar banker dude, junior is expected to be on a path of similar prestige.

Banking used to be populated with lots of jobs that require compliance and attention to rules, but not necessarily intelligence. Success was defined as being one of the 200 VPs at a regional bank and chilling at the club.

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

#267

Post by sudosysgen »

JumpCrisscross wrote: post #247
jfidbfidvdid wrote: post #191

Earlier quoted context omitted.

too complex. world is simple. boom-bust cycles enable capital to buy everything in the bust period. every thing. legal entities keep shifting to join news tax avoidance tricks. it's not a static game.

> boom-bust cycles enable capital to buy everything in the bust period. Out of curiosity, what happens to the busted capital in this toy model?

The capital in monetary terms is destroyed, it's then either bought out by surviving capital and concentrated in actual terms, or destroyed. In either case, the relative concentration of capital increases.

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

#268

Post by anonporridge »

78124781 wrote: post #211
yasman wrote: post #154

Earlier quoted context omitted.

There’s a book called “Excellent Sheep” that explores this idea as well. It’s been a while since I read it but roughly the premise was that all these “prestigious” organisations (they focused more on McKinsey et al) are another, maybe final, stage on a long ladder of structured excellence. AP/Extracurricular -> Ivy League College -> Consulting (or PE/IB) -> MBA -> ? The path is well defined and optimises for essentia…

The professor who wrote that book, interestingly, ended up being denied tenure and was subsequently unable to get another academic job despite years of trying. Here's a recent podcast with him: https://www.persuasion.community/p/deresiewicz It may not be the best thing in the world to be an "excellent sheep," but perhaps it's better than being a lone ram.

If you reject the shepherd, you have to be prepared for the brutal life of a mountain goat.

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

#270

Post by cvccvroomvroom »

motohagiography wrote: post #17

I've turned down interviews with several companies after finding out they were PE managed. If you need the job take it, but otherwise find something with hope. After looking them up on crunchbase or the public filings, a decline on sight policy on PE owned companies has saved me a lot of time and, I think, career suffering.

The problem is the vampiric, worker-hostile corporate ownership model. We need an ability to create and manage worker-owned co-ops more easily, maybe an "SAP for Co-ops". Not just to run them, but to collaborate on shared resources and infrastructure to federate smaller concerns as larger entities to the outside, be it a platform or a co-op network.
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