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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

#211

Post by 78124781 »

yasman wrote: post #154
JumpCrisscross wrote: post #136

I have a pet theory: there are managerially-minded university graduates who value prestige more than power or pay. In the post-War era, they became beige-suited company men. In my generation, they went corporate finance. Today, they work for private equity. Banking was great. Everyone–from liberal arts to engineering majors–could putz around for years in a pre-defined and prestigious path with moderately above-market…

There’s a book called “Excellent Sheep” that explores this idea as well. It’s been a while since I read it but roughly the premise was that all these “prestigious” organisations (they focused more on McKinsey et al) are another, maybe final, stage on a long ladder of structured excellence. AP/Extracurricular -> Ivy League College -> Consulting (or PE/IB) -> MBA -> ? The path is well defined and optimises for essentia…

The professor who wrote that book, interestingly, ended up being denied tenure and was subsequently unable to get another academic job despite years of trying. Here's a recent podcast with him: https://www.persuasion.community/p/deresiewicz

It may not be the best thing in the world to be an "excellent sheep," but perhaps it's better than being a lone ram.

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

#212

Post by hattmall »

JohnFen wrote: post #188
TrackerFF wrote: post #183

Earlier quoted context omitted.

Yes, they are called "Insecure overachievers". They are the bread and butter of investment banks, management consulting firms, big law firms, etc. They are also the reason that partnerships still thrive. A couple of years ago I was talking with this (big law) partner at a dinner, and we came in on the topic around partnership - and he just said it straight: The competition / rat race towards partnership is 100% skewe…

> Prestige is a powerful motivator. I know this to be true because I've seen so many people given BS titles instead of raises and be happy about it as if they got something of real value. But I don't understand it at all. Apparently, I lack the "prestige" gene.

It's not really prestige, so much as it is the perception of security. Many people are driven by fear and thus motivated by security. You can uncover this exceptionally well with enneagram personality tests. A nice new title would give a person that values it the belief that they are less expendable.

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

#213

Post by JacobThreeThree »

tiffanyh wrote: post #194
JohnFen wrote: post #188

Earlier quoted context omitted.

> Prestige is a powerful motivator. I know this to be true because I've seen so many people given BS titles instead of raises and be happy about it as if they got something of real value. But I don't understand it at all. Apparently, I lack the "prestige" gene.

My favorite title bump is “Head of X”. Because rarely the person is ever the actual head.

It also is not a formal executive title like manager, director, officer, VP etc.

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

#214

Post by gtop3 »

tiffanyh wrote: post #194
JohnFen wrote: post #188

Earlier quoted context omitted.

> Prestige is a powerful motivator. I know this to be true because I've seen so many people given BS titles instead of raises and be happy about it as if they got something of real value. But I don't understand it at all. Apparently, I lack the "prestige" gene.

My favorite title bump is “Head of X”. Because rarely the person is ever the actual head.

Declaring someone "head of X" is hedging your bet. If X goes well, then you had the foresight and leadership to expand X. If X fails, then you have a scapegoat picked out.

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

#215

Post by icelancer »

r00fus wrote: post #135
icelancer wrote: post #108

Earlier quoted context omitted.

The idea that PE comes in and sets eight figures of their own money on fire and ruins a business, shooting themselves in the foot makes no sense, yet every other story online is about them doing exactly that. Of course there are LBO scams going on (more historically rather than currently) but these billion dollar firms don't come in and lose a ton of their own money along with money of their outside investors on a re…

Isn’t LBO the norm in industry? Where they charge from the acquired company and the acquired company takes on a huge loan?

Not anymore, and almost never at small scale. It was massively abused in the 1970s to early 1990s but it's generally associated with the 1980s and specifically the book Barbarians at the Gate (which is an awesome read).

Today I would guess it's most associated with the Toys R Us and Sears failures, but surprisingly no one tends to talk about the Best Buy LBO for some reason...

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

#216

Post by closeparen »

JumpCrisscross wrote: post #136

I have a pet theory: there are managerially-minded university graduates who value prestige more than power or pay. In the post-War era, they became beige-suited company men. In my generation, they went corporate finance. Today, they work for private equity. Banking was great. Everyone–from liberal arts to engineering majors–could putz around for years in a pre-defined and prestigious path with moderately above-market…

Prestige depends on the audience. People in Silicon Valley found startups because it's cool, even when their interests are better served at "boring" big companies.

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

#217

Post by WalterBright »

briandoll wrote: post #79

A friend of mine is a Vet at a place recently sold to a PE firm. If your wait times are crazy long, if you can't get through on a phone, if you realize your vet's office has parted ways with the great vet you used to see -- that's the PE firm counting beans and destroying the service for customers in an effort to squeeze every dollar out of the system. As a specific obviously bad example -- Vet services in California…

So start a Vet outfit and take their customers away.

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

#218

Post by gtop3 »

vecter wrote: post #210
briandoll wrote: post #79

A friend of mine is a Vet at a place recently sold to a PE firm. If your wait times are crazy long, if you can't get through on a phone, if you realize your vet's office has parted ways with the great vet you used to see -- that's the PE firm counting beans and destroying the service for customers in an effort to squeeze every dollar out of the system. As a specific obviously bad example -- Vet services in California…

That sounds bad for the customer, but how does that play out for the owners? Does this sort of behavior end up working out better for them financially? If so, despite how bad it sounds, it does seem like they end up with more efficient economics (assuming it's sustainable). If not, then surely the PE firms will suffer too right?

Some thoughts on how this would playout:

* Reduced staff costs.

* Reduced potential peak. If you're at capacity during peak it might be worth the extra staff costs to capture the revenue.

* Reduced staffing flexibility. Things like vacations, parental leave, etc become tighter.

* Reduced customer satisfaction. I've stopped going to places when they lose my favorite staff member, and places a lot less consequential than a vet. This might translate to loss customers in the mid term, but you might not notice until their next vet visit in ~12 months. This might translate to bad yelp reviews.

* Presumably most of those vets let go are going to continue to be vets. It's a high skill job that pays well and people get into it for passion. That means your competition just gained access to a resource. Or maybe those vets become your new competition.

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

#219

Post by WalterBright »

primax wrote: post #192
slimsag wrote: post #178

Earlier quoted context omitted.

The level of mental trauma endured by vets I doubt is matched by elderly care nurses.

My wife worked in aged care. There are plenty of nasty or racist old people in aged care that make their job awful

My dad spent his last 3 years in a nursing home. When he passed, the nurses cried. I was surprised, I thought they were just doing a job and didn't actually care.

I was wrong, and was very grateful to them.

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

#220

Post by gtop3 »

iancmceachern wrote: post #209
epups wrote: post #169

Earlier quoted context omitted.

Why wouldn't your friend just open up a practice and compete with this dysfunctional company?

Money. It takes hundreds of thousands to do so, you gotta borrow that. Then it takes 10 or 20 years to pay that back. Then to get your retirement paid for you sell it to a private equity company.

Then the private equity fires your former employees. They borrow money to create their own clinic. They sell in their 60s to a private equity company.
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