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Private equity bought America's essential services

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Re: Private equity bought America's essential services

#191

Post by beej71 »

forshaper wrote: post #173
tavavex wrote: post #139

Earlier quoted context omitted.

Why is this downvoted? To me, it seems like a self-evident conclusion. Even the supporters of the current system would probably agree with it. When you have a system that encourages endless growth at absolutely all costs, while placing no limits at the amount of power a single entity can hold, what other outcome can there be but the biggest players absorbing everything into themselves and using their influence over p…

We haven't had a free market in the United States in awhile. It's public-private partnered market fixing. Which is good for the consumer, many times, though not all the time.

Without debating your point, I don't think it contradicts the GP's.

Re: Private equity bought America's essential services

#192

Post by esseph »

amazingamazing wrote: post #115
miltonlost wrote: post #103

Earlier quoted context omitted.

Everything is vague to you. All you're doing is concern trolling for monopolists

It really is sad that any disagreement with “pe is bad” means i am concerned trolling. Ever consider the guidelines are actually vague which is why usa keeps failing in attempts to enforce?

> Ever consider the guidelines are actually vague which is why usa keeps failing in attempts to enforce?

Your cause and effect is wrong.

The US doesn't fail to attempt to enforce, the gov representatives often get paid to not enforce by said corporations who have been allowed to put money into their campaign for election/reelection.

Re: Private equity bought America's essential services

#194

Post by fny »

pjc50 wrote: post #188
fny wrote: post #179

Earlier quoted context omitted.

A 30-year treasury offers 5% and A-grade corporate bonds offer 6.5%. You don't need to exploit essential services for the other 50bps. [0]: https://fixedincome.fidelity.com/ftgw/fi/FIYieldTable?popupM...

.. now. Five years ago that was more like 2%.

The S&P grew at ~15% annualized post GFC, and PE acquisitions of housing and essential services hasn't stopped.

Re: Private equity bought America's essential services

#195

Post by yardie »

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 weren't the only ones. Sales were getting squeezed between customers bailing and PE management wanting to stay the course.

I've seen PE make businesses more efficient by reviewing all contracts and dropping or renegotiating ones that no longer align. Closing product lines that aren't profitable. But that is year 1-2. 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.

Re: Private equity bought America's essential services

#196

Post by nekusar »

halfcat wrote: post #170
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…

> we are transferring value from our current standard of living to pay for retirement checks Isn’t this just what happens when you have an inverted pyramid (older population is larger than the younger population)? > One can argue that PEs make the business more efficient I’ve never seen it (I agree with you). To improve something they’d have to understand the business and do a bunch of work. Mostly they show up at qu…

> How does one solve pensions?

I was thinking that Covid and widespread antivaxxer mentality would have.

But no. This will be the latest ladder-pull by the boomers and silents to extract the last bit of wealth from all the younger generations. And this will impoverish gen-x and all younger generations even more so than we already are.

Re: Private equity bought America's essential services

#197

Post by WarmWash »

tavavex wrote: post #139
mghackerlady wrote: post #55

Earlier quoted context omitted.

free market capitalism will always end like this though. the end goal of capitalism is the consolidation of all things into a megacorporation or oligarchy that controls everything, creates nothing, and earns infinite money

Why is this downvoted? To me, it seems like a self-evident conclusion. Even the supporters of the current system would probably agree with it. When you have a system that encourages endless growth at absolutely all costs, while placing no limits at the amount of power a single entity can hold, what other outcome can there be but the biggest players absorbing everything into themselves and using their influence over p…

These mega-strong players always kill themselves and collapse. We can see this on the global geopolitical scale (which fundamentally acts as a true free market), where all the empires have always fallen.

The stressing part is when they are at their peak, so people would like to use regulation to short-cut right to the collapse part.

The only example we have a true free market victor that hasn't collapsed is humans, who have totally and completely dominated all other life on Earth, but man, it's certainly not looking good for us right now.

Re: Private equity bought America's essential services

#198

Post by Aurornis »

randusername wrote: post #98

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 unm…

> Hard-working founders should be able to cash out, but there has to be a better system than this one. Succession, maybe.

The large PE buyouts that came from the ridiculous ZIRP period could deliver better financial stability than handing the business down.

I know two families with businesses that attracted huge PE offers in the past few years. One of them took the buyout and the family members slowly left their jobs at the company because they effectively been early retired by their buyout.

Now the kids are looking at new businesses to buy and start for themselves with this new financial freedom that has come to the family. One of their considerations is starting another business in or around their old line of work that was sold off. They have to wait until the contractual non-compete expires, but if the PE owners are really making both the employees and customers miserable then it becomes a golden opportunity for experienced operators to come in and run a good business in the vacuum. Even many of the old employees have expressed a desire to join.

The bad PE phenomenon buyout is annoying, but businesses that become miserable for the customers and employees are not stable long-term businesses. When they decline because competitors show up to do a better job and retain better talent, it becomes a transfer of money from the lenders to the old owners and an annoying churn in the local business scene. As we see more of these failures, the willingness of banks to lend for these buyouts will go down.

Re: Private equity bought America's essential services

#199

Post by ryandrake »

rocketpastsix wrote: post #116
randusername wrote: post #98

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 unm…

I think part of the problem with the succession idea is that a lot of people in these positions worked these hard jobs to try and give their kids a better life. They encouraged their kids to go to school for their passions and now those kids are in careers far removed from what their parents did. Instead of succession, I wonder if there is a way to make it easier for these people to sell their company when its time t…

The vast majority of people can’t just go out and buy a machine shop or laundromat and then start running the business. It’s a risky asset, not like a house where you put down 20% and any bank will loan you the rest. I’d love to own a small franchise restaurant or something in my town but they cost millions that I don’t have.

And that’s before you even make it to the question of “can the person that manages to buy it actually live off of it as a lifestyle business?”

Re: Private equity bought America's essential services

#200

Post by darkwater »

giraffe_lady wrote: post #117
randusername wrote: post #98

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 unm…

> Hard-working founders should be able to cash out Why? Operating a successful business should be remunerative on its own, or else it's not successful. Owners who don't want to do it anymore can let it become worker owned. If they don't want it, it can dissolve. What else do you need? The very concept that the end of a successful business is a big payday for its creator is itself the poison here. There is no end just…

I generally agree, but this point of view shifts the blame from one big, evil, soulless PE firm to thousands of small shops owners that just wants to "retire comfortably". It's not easy to sell because one can easily sees oneself as that small owner, but not as a big evil PE.

It's the same with gentrified zones: yes there are some dark patterns going on as well, but mainly is previous, smaller owners that want to make big bucks by selling to someone with money from outside rather than someone local like themselves for less money.

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