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Private equity bought America's essential services

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Re: Private equity bought America's essential services

#371

Post by itake »

pelotron wrote: post #149
itake wrote: post #31

Earlier quoted context omitted.

One thing I don't see is the other side of this story: the sellers. I don't get why sellers are selling to PE. Can these services not "IPO"? Why do these companies need to sell? When PE takes over medical practices, my understanding is there just isn't enough capital available for a dentist to "cash out". The options are either they find another dentist to buy it, the close the practice, or they sell the private equi…

I think it's totally appropriate to hold it against them if they knowingly sell out to scumbags. Society used to look down on selling out. We wrote songs about it. But in 2026 it is glorified.

What do you think they should do? Who are they holding out for and for how long can they hold out? Retirement is a financial situation and an age. Do they shutdown the business when they are too old to function as an owner?

My friend's parent's local services company shutdown when they didn't find a buyer. A business limping under interest payments IMHO is better than a complete shutdown.

Re: Private equity bought America's essential services

#372

Post by itake »

skinfaxi wrote: post #32
itake wrote: post #31

Earlier quoted context omitted.

One thing I don't see is the other side of this story: the sellers. I don't get why sellers are selling to PE. Can these services not "IPO"? Why do these companies need to sell? When PE takes over medical practices, my understanding is there just isn't enough capital available for a dentist to "cash out". The options are either they find another dentist to buy it, the close the practice, or they sell the private equi…

How is local doctor's office going to IPO? An IPO is just selling to the public instead of a private buyer. Not to mention the amount of paperwork and ongoing reporting requirements of actually IPOing. Talking to a single buyer is easier than arranging an IPO and I would imagine the diligence far less onerous.

My point is, if not PE, how do people expect boomers to exit from their businesses?

Re: Private equity bought America's essential services

#373

Post by Aunche »

burkaman wrote: post #175
elevation wrote: post #113

Not all PE problems are existential; they will be outcompeted. What keeps a newly graduated Veterinarian from opening her own clinic and undercutting the PE competition? With no massive loans on her books, she can profitably offer lower prices than PE can. She may even drive the local PE clinic out of business.

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

People had no problem starting clinics in the past and they probably could today if they really wanted to, but there is little incentive to for the past few decades while the stock market has been booming. Why spend 80 hours a week struggling to run your own clinic and paying off loans when you can work 40 hours a week working for somebody else's clinic and invest your savings in the stock market?

Re: Private equity bought America's essential services

#374

Post by cucumber3732842 »

wilkommen wrote: post #347
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 stuff that old people need in their retirements to live is getting more expensive due to the types of shenanigans that PE firms are doing. So their pensions appear solvent now but when those old folks actually retire, their money won't go as far? Doesn't add up. I think the people who are really benefitting here are the usual suspects - the ultra rich, and the PE guys at the top doing this transfer really are evi…

> So their pensions appear solvent now but when those old folks actually retire, their money won't go as far?

The pension people aren't being scored on doing well for their clients. They're scored on money. They don't care.

Ain't no different than some jerk in an insurance/regulator office cooking up a rule about PPE based on first order assessment of a bunch of crappy data. The guy who gets mashed by a forklift he couldn't hear coming doesn't hurt their KPIs. He didn't suffer occupation related hearing loss. MissionAccomplished(TM)

Pretty much every industry that deals at the statistical level whether it's PE making investments or something else runs in this manner.

Re: Private equity bought America's essential services

#375

Post by iboisvert »

ryukoposting wrote: post #332
MichaelZuo wrote: post #286

Earlier quoted context omitted.

Huh? Don’t many jobs still have gold plated pensions? Like millions upon millions? They need to be paid out somehow.

> many jobs... millions upon millions ...no. It doesn't even matter what the rest of the words in the question are. Just no, lol. > They need to be paid out somehow. No they don't. Lots of pensions, especially the not-gilded ones, go bankrupt. In fact, that's precisely what happens to pensions of companies that are acquired by PE. The company gets stripped for parts, it goes bankrupt, and PBGC covers a fraction of th…

> bloated pensions

I find this characterization offensive. Who is to judge if the defined benefit pension if a primary school teacher or fireman, for example, is bloated? It's part of the negotiated pay package, nothing more or less.

Re: Private equity bought America's essential services

#376

Post by alexpotato »

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…

> By year 3 they start the squeeze, layoffs, asset selloffs (stripping), and lowering quality, raising prices. That is where the real teeth of wolf are shown.

To play devil's advocate:

Doesn't this also open the market to new entrants?

e.g. young person looking to start a HVAC company in the old days couldn't compete with the established firm that already had contracts and the local market wasn't big enough for two players.

If the established firm gets bought by PE and driven into the ground, wouldn't the newer more nimble firm now have a better competitive market position?

Re: Private equity bought America's essential services

#377

Post by thrance »

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…

No, if you wanna fix or ban PE, ban PE. PE is just a really easy and safe way for financiers to make extra cash, with huge externalities that everyone else pays for. The people benefiting from this are those who already have a lot of capital, and while it is true that old people generally have more than young people, don't fall for this simplistic generational warfare narrative. PE is also going after retirement homes and elderly care services.

It's just a ploy for the wealthy to extract even more wealth from the rest of us, while stripping the country for parts and dooming the actual economy for years to come.

On the subject, if you have 50 minutes to waste: https://youtu.be/tyNFosOFUDM?is=hwDH5tFCAYc7soHG

Re: Private equity bought America's essential services

#378

Post by jandrewrogers »

mmooss wrote: post #251
yardie wrote: post #195

Earlier quoted context omitted.

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?

Companies have finite attention. Taking on the risk of switching tools often has a higher cost than paying more for the existing tools. There is a significant opportunity cost offsetting the savings. Trying to compete on price with a tool a company already uses is usually an exercise in futility.

A core function of enterprise sales is figuring out where that opportunity cost threshold is. PE often targets industries that are currently (in their estimation) priced well below that threshold.

Re: Private equity bought America's essential services

#379

Post by bondarchuk »

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…

I don't get it. If pensions stopped existing, would people stop doing PE even though it's profitable? If it is possible to get outsized returns "because pensions need them" then isn't somebody gonna notice and get those returns anyway, pensions or not?

Re: Private equity bought America's essential services

#380

Post by yardie »

mmooss wrote: post #251
yardie wrote: post #195

Earlier quoted context omitted.

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?

Their competitors did exactly that!

Moved right in with the same old price so I didn't even have to expand the budget and they threw in training for free!

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