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Private equity bought America's essential services

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Re: Private equity bought America's essential services

#251

Post by mmooss »

yardie wrote: post #195
spyckie2 wrote: post #118

The irony is that PEs exist largely because of pension funds. So to sum it up (not so nicely) we are transferring value from our current standard of living to pay for retirement checks for our old folks. Pensions fund a significant part of PE and they do so because they need around a 7% return in order to look solvent. If they do not have the higher PE returns, they basically go out if cash in 10 years and everyone w…

One of the tools we use was bought by PE last summer. When it was time to renew our support contract had tripled in price. I use it across 10 projects so our costs went from $200k to $500k. I let our account manager know this was unacceptable but even his hands were tied. Cancelled those contracts and let them know we were retooling with a competing tool and opensource to fill those gaps. The impression I got was we…

In this case, why doesn't someone else see a market opportunity and sell competing tools for less?

Re: Private equity bought America's essential services

#252

Post by jmyeet »

jonhohle wrote: post #244
jmyeet wrote: post #228

Earlier quoted context omitted.

This reads as apologia, blame-shifting, "I was just following orders". People have to eat. They need water. They need a roof over their head. Nobody has to buy out all the veterinarians in an area at rates they can't say no to, have them sign non-competes and them jack up all the prices by 300% because, hey, you now own all of them. Nobody has to buy up all the trailer parks, which are normally peopple's last stop be…

Worse than vets is hospital system and medical offices. In our area there are about 6 hospitals within reasonable driving distance. 1 is a mayo and the 5 others are split between the two major mega-providers. One of those also partnered with CVS/Aetna to provide marketplace insurance, until they decided that didn’t have high enough margins so they dropped 100k (28%) subscribers.

The healthcare system is just rent-seeking upon rent-seeking. PBMs are another big one where the PBM gets to decide after the fact what your rebate is. No conflict of interest there when United Healthcare owns Optum, which I think is the biggest PBM.

Re: Private equity bought America's essential services

#253

Post by mikeyouse »

wavefunction wrote: post #211
Galanwe wrote: post #207

Earlier quoted context omitted.

> The irony is that PEs exist largely because of pension funds. The irony goes way deeper than that. A large part of PE clients are university endowment funds. Harvard for instance has close to $60B in its endowment fund, 40% of which is invested in PE. At this point, Harvard is more an investment fund, with a university as side business.

I don't believe that's ironic. Harvard and other "elite institutions" are the places with massive endowments, not state colleges or anything. Frankly the more I think about it the more it's nothing particularly interesting, just a fractal representation of the privilege of wealth as far as you want to drill down.

Not entirely... U Mich's is ~$20 billion, UVA & OSU are both around $8 billion, UCLA's is ~$5 billion, the Texas + Texas A&M system have nearly $50 billion in AUM.

https://en.wikipedia.org/wiki/List_of_colleges_and_universit...

Re: Private equity bought America's essential services

#254

Post by derf_ »

spyckie2 wrote: post #118

The irony is that PEs exist largely because of pension funds. So to sum it up (not so nicely) we are transferring value from our current standard of living to pay for retirement checks for our old folks. Pensions fund a significant part of PE and they do so because they need around a 7% return in order to look solvent. If they do not have the higher PE returns, they basically go out if cash in 10 years and everyone w…

> So if you wanna fix or ban PE, solve pensions.

We solved pensions. People have defined-contribution plans now. I would expect insurance float to dwarf pensions as a source of PE funding.

The real reason PE exists is because it charges high fees. The financial industry does not make products to serve customer needs, though by happy accident that sometimes happens. It makes products to charge fees. Index funds removed a big chunk of the fees that active mutual funds used to charge, so financiers went looking for a replacement.

Even if you snapped your fingers and all remaining pensions (and insurance float?) disappeared, PE is aggressively going after individual retirement accounts, now. Most insidiously, trying to work their way into the "target date" funds that are the defaults for most plans. So "solving pensions" will not make PE go away.

Re: Private equity bought America's essential services

#256

Post by avazhi »

senderista wrote: post #164

This subject deserves better than an AI slop article.

Couldn't get through the first line lol.

Why would anybody expend time reading something that is probably full of hallucinations? And what's crazy is clearly only a few of us have enough experience with Instruct Mode LLMs to even spot it. The rest of these guys don't even know they're reading slop.

Re: Private equity bought America's essential services

#257

Post by nyeah »

randallsquared wrote: post #218
nyeah wrote: post #71

Earlier quoted context omitted.

LBOs are much worse than that. It's like buying a rental property where the mortgage is owed by the a shell corporation that owns the property. The shell corporation, not the purchaser, owes the debt. It's like taking out a mortgage on a house, but letting the house owe the debt.

When you put it like that, you make it sound reasonable! The house being collateral for the debt seems in a blurry way to be "the house owes the debt".

That's pretty blurry, though. Blurry enough that we don't distinguish between the collateral and the borrower.

Re: Private equity bought America's essential services

#258

Post by triceratops »

spyckie2 wrote: post #118

The irony is that PEs exist largely because of pension funds. So to sum it up (not so nicely) we are transferring value from our current standard of living to pay for retirement checks for our old folks. Pensions fund a significant part of PE and they do so because they need around a 7% return in order to look solvent. If they do not have the higher PE returns, they basically go out if cash in 10 years and everyone w…

The S&P 500 already returns 7%. Why do pension funds need PE?

And like FIRE devotees, maybe they should model a lower withdrawal rate.

Re: Private equity bought America's essential services

#259

Post by sbuttgereit »

c54 wrote: post #141

Good article and discussion but I couldn’t find anything about the author? There’s no bylines or about page anywhere on the site. Does anyone know about the source?

Check this out...

https://rubbishtalk.com/media-kit/

Whoever put this together couldn't even be bothered to compete the template they were using.

Re: Private equity bought America's essential services

#260

Post by burkaman »

elevation wrote: post #226
burkaman wrote: post #175

Earlier quoted context omitted.

How is a new graduate supposed to start a business without a loan?

Could a veterinary business not be bootstrapped? Assuming you had $$$ for some supplies but couldn't afford to lease a commercial building, you could provide small mammal services from your vehicle, driving to people's homes to give vaccinations and well care. Being mobile would also allow you to serve a larger market than a fixed clinic; you could serve a couple small towns on Monday, a couple others on Tuesday, and…

Sure, that sounds plausible. I'm not saying you need an enormous amount of money, but for this scenario you need supplies, car payments, gas, probably some kind of licensing fee, insurance, some kind of advertising, and a few months of rent and living expenses until you start making a profit. Maybe like $10,000, plus more as a safety net in case it doesn't work out and you need to find a job?

Even if they are lucky enough to have no debt, I don't think the average graduate has $10,000+ in the bank to spend. I have never started a business so I honestly have no idea how hard it is to get a small business loan for something like this, maybe it's easy, but even so it's certainly risky.

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