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Private equity bought America's essential services

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Re: Private equity bought America's essential services

#461

Post by yoyohello13 »

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…

You can have succession without passing it on to a biological child. Train a replacement who understands the company values. Hell, you could even do adult adoption the ‘carry on the name’ if you really want to.

Re: Private equity bought America's essential services

#462

Post by hermitcrab »

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…

>One of the tools we use

Does it begin with A and end with X? ;0)

Re: Private equity bought America's essential services

#463

Post by somelamer567 »

djoldman wrote: post #430

What's rarely addressed in these articles is the question: if the product/service is so bad relative to the cost, where's the competition? Specifically in this article about fire trucks, they say that margins have tripled... ok, why isn't anyone jumping on that?

The PE vultures are deliberately targeting business sectors with high barriers to entry. It's part of the grift.

Re: Private equity bought America's essential services

#464

Post by JumpCrisscross »

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…

> if you wanna fix or ban PE, solve pensions

PE is a bogeyman, emblematic of a problem but not the problem per se. The problem is leverage. Critical services should have a borrowing limit and prohibitions on any pay-outs to owners while any leverage is in place.

Kicking out private equity and replacing them with family offices doesn’t solve anything; removing the debt does.

Re: Private equity bought America's essential services

#465

Post by swivelmaster »

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…

This is an exceptionally high-quality comment. You on bsky or threads or somewhere I can follow you?

Re: Private equity bought America's essential services

#466

Post by quickthrowman »

the_sleaze_ wrote: post #385
alexpotato wrote: post #376

Earlier quoted context omitted.

> 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 p…

As long as customers choose services based on quality. The HVAC for example - the large firms around you do not run HVAC/plumbing/electrical, they run marketing companies that happen to schedule and bill H+P+E service appointments. That being said I've never heard or encountered a single services company in the US that can't find business, in fact it's the opposite. They're trying not to drown themselves in front of…

> The HVAC for example - the large firms around you do not run HVAC/plumbing/electrical, they run marketing companies that happen to schedule and bill H+P+E service appointments.

Maybe if you’re talking about the small residential market, that’s not where the money is.

The large HVAC/Electrical/Plumbing contractors in my area all perform their own work, including the one I work for. Large contractors do commercial and industrial work, not service calls for homeowners. Doing service calls homeowners sounds like a nightmare, personally.

Bain Capital just bought Service Logic which is a holding company for HVAC contractors. They own a couple of the local HVAC shops and they all have their own PMs, sales, estimating, and field staff.

Re: Private equity bought America's essential services

#467

Post by yfw »

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…

Old rich folks

Re: Private equity bought America's essential services

#468

Post by piva00 »

protonbob wrote: post #450
emj wrote: post #437

Earlier quoted context omitted.

There are so many things that went wrong during the pandemic. You were not lied to, that means someone has intent. The lesson was not that vaccines are bad imho. I do not live in the US, so I just find it tiresome to listen to you guys blaming everything on people. There was no right way.

Vaccines for respiratory illnesses are bad. Even Fauci admitted so. Why do you assume good intent from the United States government when the FDA is bought and paid for by pharmaceutical companies.There was so much money to be made on specifically covid vaccines. I am not anti vax in general.

The flu vaccine has saved countless elderly lives.

You don't assume good intent from the US and its institutions, fine, but other countries also rolled out vaccines, are they all bought and paid by pharma companies? Is that really the argument?

Re: Private equity bought America's essential services

#469

Post by mgh95 »

bigbadfeline wrote: post #448
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…

> But sadly it’s not some evil dudes at the top doing this transfer, the market force behind it is because we promised old people way too aggressive paychecks when they retired. You seem to be quite confused about pensions, not only "old people" have pensions. Actually the vast majority of contributions to pensions funds come from people who aren't old at all and are actively employed. > If they do not have the highe…

> You seem to be quite confused about pensions, not only "old people" have pensions. Actually the vast majority of contributions to pensions funds come from people who aren't old at all and are actively employed.

This is exactly how pensions work: newer members to the defined benefits plan pay for older members. This isn't surprising.

> Where would they "scream"? On the internet? And who'd hear them? The answer is nobody in any PE cares about anyone screaming.

At the ballot box. There is a reason that public pensions are exempt from the PBGC reserve ratio requirements. People with pensions aggressively vote their interest.

Re: Private equity bought America's essential services

#470

Post by quickthrowman »

deepfriedchokes wrote: post #427
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…

We should be encouraging employee stock purchase plans with tax incentives. [0] It’s better for the businesses and better for our communities than PE. [0] https://en.wikipedia.org/wiki/Employee_stock_purchase_plan

I think you meant ESOP (Employee Stock Ownership Program), not ESPP. I work for a 100% ESOP company and it’s been very beneficial to me and also the former owners were able to cash out without selling to the devil.

https://en.wikipedia.org/wiki/Employee_stock_ownership_plan

An ESOP is where a portion of or an entire company is sold to the employees. Our company took out loans to acquire the shares from the former owners and shares are disbursed to employees yearly instead of purchased by employees. It took 5 years to fully buy out the former owners, so we’re a 100% ESOP now and we just finished paying off the loans taken out to buy out the former owners.

An ESPP just gives employees of a company the option to buy shares at a discount.

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