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Private equity bought America's essential services

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Re: Private equity bought America's essential services

#91

Post by thisisidiotic »

TheOtherHobbes wrote: post #19
kokken wrote: post #9

Earlier quoted context omitted.

It is not analogous because if you sell your house and the sale money is not enough to cover your mortgage you are still on the hook for what's left of the principal. A leveraged buyout is exclusively on the purchased company's books, so if the company goes to zero the PE parent company is not on the hook for a single penny.

Yes, it's using bankruptcy and limited liability to extract value from companies that may well be completely solvent and functional with little/no downside or risk to PE. Pure parasitism.

bingo

Re: Private equity bought America's essential services

#92

Post by amazingamazing »

asolove wrote: post #89
amazingamazing wrote: post #86

Earlier quoted context omitted.

YComb was just an example, though. Should companies be able to be bought and sold at all? My opinion is yes. Agree or disagree?

The OP explicitly answers this: go back to pre-80s antitrust policy. Companies can be bought and sold but not if it creates concentrations of economic power that allow them to dictate prices to vendors or customers.

This is vague and not actionable. Should Microsoft and Amazon have been able to buy Anthropic and OpenAI 5 years ago?

People always give these vague guidelines (and even the guidelines in the 80s were) and wonder why they are easily circumvented.

Re: Private equity bought America's essential services

#93

Post by nicce »

palmotea wrote: post #81
amazingamazing wrote: post #44

Earlier quoted context omitted.

How will that work - for example Y Combinator classes. They cannot be acquired? What about acquihires? Cant stop that - employees have their own agency.

> How will that work - for example Y Combinator classes. They cannot be acquired? For the record: national economic policy shouldn't revolve around Y Combinator classes and similar startups. I'm totally fine if it turns out a sensible antitrust policy completely destroys the acquisition exit pathway for tech startups. I'm not saying one will, but I'm saying that's a cost I'm willing to pay.

> I'm totally fine if it turns out a sensible antitrust policy completely destroys the acquisition exit pathway for tech startups.

And it should also prevent the acquihire.

Re: Private equity bought America's essential services

#94

Post by hnthrow0287345 »

amazingamazing wrote: post #21

Seems strange to me: 1. No one forced these people to sell. Is the idea that you can’t sell to an entity with more money? If you block that good luck with the world economy. 2. If above is ok is the idea that the new owner is inherently worse because they have more money, whereas as the smaller would be OK then where are the new entrants? 3. Going to the article it is clear enough. These industries just are not lucra…

PE has a bad reputation, maybe for LBOs, maybe for buying up doctors' offices and retirement homes, and hospitals and making them objectively worse in terms of patient care.

My family doctor underwent that along with several of her local peers and got out from under it and started her own practice. I'm obviously not her only patient, so yes, heightening stress on caregivers by demanding more work to drive profits higher is justifiable of a bad reputation.

Leaving things like medical care, food, water, shelter at the mercy of for-profit dynamics leaves the possibility open that those services stop being provided because it is unprofitable at the expense of the population.

America is deciding it likes profit over its population.

Re: Private equity bought America's essential services

#96

Post by airstrike »

lenerdenator wrote: post #66

Again, we have broken higher risk, higher reward. If you just keep gutting companies with leveraged buyouts, you're not taking on any real risk. If you're buying up firms that deliver "essential services", you're likely engaging a monopoly. Again, low risk, high reward. A direct violation of the rules of how investments should work. Regulate the monopoly and this goes away.

Do you think losing the equity portion of the investment means no risk? It's not fully debt financed.

And that debt financing bears an interest proportional to the riskiness of the asset's cashflows.

There are lots to hate about LBOs but they aren't entirely devoid of value

Re: Private equity bought America's essential services

#97

Post by hilariously »

amazingamazing wrote: post #92
asolove wrote: post #89

Earlier quoted context omitted.

The OP explicitly answers this: go back to pre-80s antitrust policy. Companies can be bought and sold but not if it creates concentrations of economic power that allow them to dictate prices to vendors or customers.

This is vague and not actionable. Should Microsoft and Amazon have been able to buy Anthropic and OpenAI 5 years ago? People always give these vague guidelines (and even the guidelines in the 80s were) and wonder why they are easily circumvented.

This is actually how anti-trust works - if you decide a company gets too big you Ma Bell it and break it up, its very actionable, just hard.

Re: Private equity bought America's essential services

#98

Post by randusername »

Article doesn't really dig into the angle I personally find most horrifying, strip-mining social capital.

In my area PE is gobbling up mom-and-pop apartment complexes, plumbing companies, restaurants, and generally making customers and employees alike pretty miserable.

Hard-working founders should be able to cash out, but there has to be a better system than this one. Succession, maybe. Not that we should push an unmysterious destiny on our children, but maybe more ought to consider pulling one?

Re: Private equity bought America's essential services

#99

Post by mschuster91 »

amazingamazing wrote: post #92
asolove wrote: post #89

Earlier quoted context omitted.

The OP explicitly answers this: go back to pre-80s antitrust policy. Companies can be bought and sold but not if it creates concentrations of economic power that allow them to dictate prices to vendors or customers.

This is vague and not actionable. Should Microsoft and Amazon have been able to buy Anthropic and OpenAI 5 years ago? People always give these vague guidelines (and even the guidelines in the 80s were) and wonder why they are easily circumvented.

> Should Microsoft and Amazon have been able to buy Anthropic and OpenAI 5 years ago?

Antitrust enforcement can be done retroactively as well, if it appears that a large company abuses its financial firepower to undercut competitors or a marketshare gets too dominant.

Re: Private equity bought America's essential services

#100

Post by miltonlost »

amazingamazing wrote: post #92
asolove wrote: post #89

Earlier quoted context omitted.

The OP explicitly answers this: go back to pre-80s antitrust policy. Companies can be bought and sold but not if it creates concentrations of economic power that allow them to dictate prices to vendors or customers.

This is vague and not actionable. Should Microsoft and Amazon have been able to buy Anthropic and OpenAI 5 years ago? People always give these vague guidelines (and even the guidelines in the 80s were) and wonder why they are easily circumvented.

How is going back to a policy that used to work "vague and unactionable"? It literally had been actionable.
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