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Private equity bought America's essential services

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Re: Private equity bought America's essential services

#271

Post by Sebguer »

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…

this is a peak HN comment in terms of cluelessness about the realities of how the world works if you're an ordinary person.

Re: Private equity bought America's essential services

#272

Post by thmsths »

smallmancontrov wrote: post #135
jonstewart wrote: post #119

Earlier quoted context omitted.

Statutory antitrust regulation would be fantastic. Instead of litigation, the regulators, corporations, and shareholders know when a business must split or divest. The firm files a plan, it gets approved, everyone wins except monopolists.

Progressive business taxes. At a certain income level, natural pressure starts mounting to split.

Not a bad idea honestly. Would be interesting to see how it affects tech companies since they rely on hypergrowth. My one worry is that instead of divesting they would just play shell games with complex ownership structures.

Re: Private equity bought America's essential services

#273

Post by maltyr »

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…

I think the other thing is the older generation are of the opinion that a steady paycheck is somehow safer than owning your own company, mostly because most of them never sat in the other side of the table.

This leads to them pushing their kids to be employees even though that's...really contradictory to their actual lived experience.

Re: Private equity bought America's essential services

#275

Post by _DeadFred_ »

glitchc wrote: post #120
fredley wrote: post #13

The people behind these funds are playing Monopoly IRL, and this in particular makes me very angry. The UK high street has been a notable victim. Gradually, over the past couple of decades, company after company has been snapped up by PE. Not just shops, but restaurants too. Suddenly you realise that the 5 or 6 high street chains that were competing are now owned by the same fund. Quality collapses, prices rise, not…

You're only thinking from a consumer perspective. When it comes time to sell a business, original owner wants to retire or what not, most small businesses have a hard time finding a buyer. This forces the owner to continue working beyond their time or face destitution. Having a market where PE can snap up a small business is a god-send for these owners. It meets a market need.

Hard sell in a world where the average worker is expected to survive without a nice final buyout and told to budget/plan for that shit.

Re: Private equity bought America's essential services

#276

Post by parineum »

jmyeet wrote: post #252
jonhohle wrote: post #244

Earlier quoted context omitted.

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.

I see the healthcare system's bloat as a symptom, not a cause of the expense.

It's kind of like the university system. It's a (mostly) privately run industry that gets massive injections of cash from the government because of both campaign promises (everyone needs healthcare, everyone goes to college and, bonus, everyone gets a house) and it being an incredibly unpopular position to either remove that funding or make the program entirely public which would, imo, alleviate both problems (but have their own unique drawbacks). The hybrid model we have is the worst of both worlds.

The hybrid system we have now of massive injections of public money into private industry is like blood in the water for do nothing intermediaries. PBMs are just the assistant dean of underwater basketweaving for medicine.

Re: Private equity bought America's essential services

#277

Post by briffle »

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…

My State is essentially screwed for budgeting, because for years, our public retirement system garunteed "AT LEAST 8%" to accounts. Some years was much higher. I have a parent that make more, 10 years after retirement, then they ever did working.

They moved around the year 2000 to accounts that don't have the AT LEAST clause, and they earn what they earn, but due to the backlog of people still retiring that were grandfathered in, its wrecking our state.

My city has a huge budget deficit, but 24% of its total payroll budget goes to the public retirement system to 'catch up' from years when it did not make 8%. Next year or two, that is supposed to jump to 28% of payroll.

Problem won't start getting better until something like 2034 when the boomers start 'leaving the retirement system'

Re: Private equity bought America's essential services

#278

Post by rocketpastsix »

maltyr wrote: post #273
rocketpastsix wrote: post #116

Earlier quoted context omitted.

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…

I think the other thing is the older generation are of the opinion that a steady paycheck is somehow safer than owning your own company, mostly because most of them never sat in the other side of the table. This leads to them pushing their kids to be employees even though that's...really contradictory to their actual lived experience.

yea the side of the table they sat on is one that fluctuates month over month, year over year. They recognize that it can work out, but its a gamble whereas working for a steady company (pre 2026 I guess) is the better option for their kids.

Re: Private equity bought America's essential services

#279

Post by nyeah »

sokoloff wrote: post #161
nyeah wrote: post #72

Earlier quoted context omitted.

Sure that is commercial lending.* And the acquirer owes the debt. But that's not how LBOs work. In an LBO the target owes the debt. *Coverage of 1:1 is an accident waiting to happen, but otherwise sure.

That's not especially different from the typical LLC/SPE holding structure where individual properties in a large real estate portfolio are not held directly, but rather by a single-purpose entity that holds each property and then is owned by a larger but distinct entity. You don't want an issue in a single company/property to be able to take down your entire holding company. If someone will lend you money without cr…

>If someone will lend you money without cross-collateralization, why wouldn't you prefer that?

I would prefer that! I'd prefer even more strongly that the debt be owed by someone else entirely, so a default isn't associated with me at all. If you're up for it I'd also prefer to use your credit card number to buy stuff on Amazon. But for whatever reason the law doesn't always seem to follow my preference.

I'm sensitive to your point about restricting formation of new corps. The system can't just be changed randomly without extremely careful thought. And often not even then.

Re: Private equity bought America's essential services

#280

Post by rocketpastsix »

ryandrake wrote: post #199
rocketpastsix wrote: post #116

Earlier quoted context omitted.

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…

sure but a restaurant is always going to be a risky asset. I am thinking more in terms of a plumbing business. It's a business that will always have a need, no matter the economy because a bursting pipe doesnt care if its a recession or a booming market.

I guess what I would like to see is a pathway to making it easy to buy or start up crucial businesses like a plumbing business, HVAC company, etc. As the current generation of owners want to sell and retire, we should make it easier for people to be able to get in there and buy these companies before PE can.

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