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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

#21

Post by 8note »

bena wrote: post #9

> When KKR buys Toys“R”Us or when Carlyle buys the nursing home chain ManorCare, the debt is held by the company that they bought That right there is what should be made illegal. Somehow. There's probably all sorts of technicalities wherein KKR didn't buy it directly, but as the majority of the board of TRU, authorized the self-purchase or something like that. But you shouldn't be able to force a company to essential…

It should incur some tax in that you took out debt with one entity, then another entity paid off your debt and it on its own. The PE has been paid the amount of the loan by the company they just bought as some kind of return

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

#22

Post by scarface_74 »

I am not anti-capitalists by any means and I think much of the VC industry is a Ponzi scheme. But at least some good comes out of it occasionally.

But private equity is pure evil. I worked for a number of VC backed companies and the only one that failed completely was just not able to pivot to a changing mobile landscape as much as we tried.

We had a years long head start on mobile devices/field services with Windows CE and Microsoft imploding in mobile and the rise of iPhones and cheap Android devices was too much of a sea change.

On the other hand, the slice and dice and look good for the public market that I saw first hand from a PE firm when I was the tech lead was too much. They wouldn’t hire any permanent people for a massive migration/integration effort as they were consolidating the market and forced me to use contractors.

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

#23

Post by bequanna »

bena wrote: post #9

> When KKR buys Toys“R”Us or when Carlyle buys the nursing home chain ManorCare, the debt is held by the company that they bought That right there is what should be made illegal. Somehow. There's probably all sorts of technicalities wherein KKR didn't buy it directly, but as the majority of the board of TRU, authorized the self-purchase or something like that. But you shouldn't be able to force a company to essential…

Well, they aren’t really forcing the company to do anything. The original owners agree to the sale which is financed by debt that is secured by the business.

The other non-owner stakeholders (employees, customers) may not enjoy this new deal but that is the reality with any new owner of a business.

Of course, it is crappy when this results in negative experiences for them but at the end of the day, employees are free to work elsewhere and customers are free to buy elsewhere.

That last sentence is mostly meant as a warning to the new owners: screw up the business too badly and you won’t have clients or employees.

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

#24

Post by rocket_surgeron »

bena wrote: post #9

> When KKR buys Toys“R”Us or when Carlyle buys the nursing home chain ManorCare, the debt is held by the company that they bought That right there is what should be made illegal. Somehow. There's probably all sorts of technicalities wherein KKR didn't buy it directly, but as the majority of the board of TRU, authorized the self-purchase or something like that. But you shouldn't be able to force a company to essential…

[flagged]

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

#25

Post by Veliladon »

bell-cot wrote: post #19
bena wrote: post #9

> When KKR buys Toys“R”Us or when Carlyle buys the nursing home chain ManorCare, the debt is held by the company that they bought That right there is what should be made illegal. Somehow. There's probably all sorts of technicalities wherein KKR didn't buy it directly, but as the majority of the board of TRU, authorized the self-purchase or something like that. But you shouldn't be able to force a company to essential…

Old, old school solution: Nobody is stupid enough to buy the mountain of debt (junk bonds, whatever) - debt which will only be paid off if everything goes exactly perfect for many years to come. Perhaps the SEC and DoJ should be considering fraud charges against the ratings agencies, investment banks, brokers, etc. who (in effect) represented that debt as worth ~100 cents on the dollar?

PE doesn't go through rating agencies. Their deals are by and large unrated and the debt for the most part is not traded on the secondary market because of that. That's why they can pull off so much shady shit.

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

#26

Post by zactato »

oneplane wrote: post #14
S_A_P wrote: post #6

I don't know the answer here, so Im asking hoping that someone may. Couldn't private equity be seen as the "ants" of the economic landscape? Scraping the skeleton companies of the world for the last bits of meat on the bone and then move on to the next?

I'd say more like some slimy poison frog, toxic, nasty and only care about themselves while smearing themselves all over the place. Looks great from a distance tho. Or, they are a self-aware trolley that eats run-over people after choosing to switch tracks to where a bunch of people are tied down. I think more similar descriptions can be found, but as for what they really are: definitely not the economy immune system…

Frogs are notorious for their selfishness.

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

#27

Post by bena »

bequanna wrote: post #23
bena wrote: post #9

> When KKR buys Toys“R”Us or when Carlyle buys the nursing home chain ManorCare, the debt is held by the company that they bought That right there is what should be made illegal. Somehow. There's probably all sorts of technicalities wherein KKR didn't buy it directly, but as the majority of the board of TRU, authorized the self-purchase or something like that. But you shouldn't be able to force a company to essential…

Well, they aren’t really forcing the company to do anything. The original owners agree to the sale which is financed by debt that is secured by the business. The other non-owner stakeholders (employees, customers) may not enjoy this new deal but that is the reality with any new owner of a business. Of course, it is crappy when this results in negative experiences for them but at the end of the day, employees are free…

So you're saying that technically, it isn't what it looks like it is. That technically, TRU is buying itself. That technically KKR isn't actually the new owner.

Technically, it's still predatory.

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

#28

Post by andix »

SNosTrAnDbLe wrote: post #5

I have firsthand experience of how PE ruins startups. We were a small startup and unfortunately our founder decided to go with a PE firm rather than a VC firm for a round of funding. The latter were upfront about job cuts but the PE firm did not say anything until them took over. The founder got a good paycheck but we were left holding the bag. There was a bloodbath and they ruined the culture, the product and the mo…

Was it at least a good deal for the founder?

I feel your pain about what happened. I've seen comparable things a few times first hand. My learning was: just leave once the change starts, only stay if you're getting something out of it. It's not my company, I'm only in charge of my life, I'll find something better soon.

I think I would not recommend to run once PE is mentioned, it can also change for the better, but it can be a red flag to look more closely.

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

#29

Post by bombcar »

addflip wrote: post #7

It's a shame what's happened to my local HVAC contractor. It used to be a great local operation where a real person picked up when you called. But lately, after a private equity group took over, it's all automated calls and foreign call centers. The personal touch is gone and, sadly, their service quality has taken a noticeable hit. It's just not the same anymore.

I knew some local guys that basically made a living doing that - start an HVAC company, get it working good, sell it to a equity group, they destroy it pretty quickly, everyone quits, then one of the other original guys starts a new HVAC company, gets it working good, sells it ...
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