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Private equity bought America's essential services

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Re: Private equity bought America's essential services

#491

Post by ryukoposting »

Aurornis wrote: post #340
bombcar wrote: post #304

Earlier quoted context omitted.

I knew of a family-run hoagie shop that sold to "investors" (not sure if it was PE, probably was) three times, each time they ran it to shit amazingly quickly, and they were able to buy it back for a song and fix the damage.

Yep! These situations are annoying for the customers, but an amazing opportunity for people trying to run good businesses. Let the bad operators run a company into the ground and then buy the pieces at an amazing discount.

Of course, depending on the business, there's a risk that your customers all find alternatives as soon as things go to hell, and when you come back they say "well why did you sell to those assholes in the first place?"

Re: Private equity bought America's essential services

#493

Post by doctorpangloss »

BirAdam wrote: post #459

All of the oldest folks I knew were wrong about many things, but they were right to say that morality must be at the center of all public discourse. Pensions were part of the contract of employment for many old companies. As those companies became more interested in ever higher rates of return without offering higher value to customers, the companies became fragile. Becoming fragile, they were eventually broken. Then…

Yeah, buddy, lemme tell you, every old person you ever knew, if they had the good luck to have bought a house in California in the 80s or older for kopecks, that they pay basically no taxes on, and then will go onto leave in a completely dilapidated state to sell for $1.5m... suddenly they're not talking about the morality of their windfall, right? How do you not see that?

Re: Private equity bought America's essential services

#494

Post by lenerdenator »

airstrike wrote: post #392
lenerdenator wrote: post #348

Earlier quoted context omitted.

> Do you think losing the equity portion of the investment means no risk? It's not fully debt financed. To quote the bandana-clad bard of Venice, CA, Mike Muir: "it's the difference between a Porsche and a Rolls Royce". If you're playing the LBO game at the level where you're looking at buying up chunks of a community's essential services, you are unlikely to be doing business in a way that presents meaningful risk t…

You don't have to take meaningful risk to your personal financial situation for an investment to be risky. The CEO of Coca-Cola also takes no meaningful risk to their personal situation. Should we forbid CEO roles?

> You don't have to take meaningful risk to your personal financial situation for an investment to be risky

According to "high risk, high reward", yes, you do.

> Should we forbid CEO roles?

The current model of it? Absolutely. It's built upon the pretense that these people are the most competent available for the job and that they have a stronger-than-average innate drive to see the business succeed in a way that serves the most good to interested parties. This gets proven false on an almost daily basis in very demonstrable ways these days. I was unlucky enough to spend four years under empty suit CEOs at a former employer. Neither of those men were worth a penny of their contracts. They majorly damaged the company, its customers (hospitals), the workers' finances, and the local economy. Would a "one share, one vote" system of corporate governance have done worse? Probably not.

Re: Private equity bought America's essential services

#495

Post by slibhb »

somelamer567 wrote: post #460
slibhb wrote: post #416

Earlier quoted context omitted.

The idea that slavery is a free lunch that is only banned on moral grounds is wrong. Slavery is bad economics. If you want your economy to grow, paying workers is not bad. Economic growth isn't zero sum.

Capitalists are selfish, and have short planning horizons. For a capitalist, slavery is absolutely rational. The only reason why they don't do it today is because it's illegal.

Selfish capitalists want to accumulate capital and grow the economy. Slavery is a bad strategy for achieving these ends. There is ample historical evidence of this, and it also lines up with mainstream economic theory.

People who argue otherwise simply cannot escape their zero-sum worldview.

Re: Private equity bought America's essential services

#496

Post by shawn_w »

dickersnoodle wrote: post #355
MisterTea wrote: post #305

Earlier quoted context omitted.

> When it was time to renew our support contract had tripled in price. Currently in PE hell myself. Company I work for was bought out few years ago when the owner cashed out. Right out of the gate it was a numbers go up game. New sales person was hired and their first order of business was - drum roll please - triple prices! Customers balked. Some walked. In addition, some employee benefits evaporated, vacation time…

I'd have said ghouls. At least vampires are sexy...

These are Count Orlock style vampires, not Lestat and Louis.

Re: Private equity bought America's essential services

#497

Post by slibhb »

sleight42 wrote: post #486
slibhb wrote: post #418

Earlier quoted context omitted.

Rose colored glasses. The classic example is airline deregulation which happened under Carter. The real cost of flights is way, way down since then. But this doesn't stop people from complaining about how "flying is a worse experience now" and wishing for a return to inane regulations.

Were you alive in the 80s? Flying really was better back then. The food was edible. The seats weren't optimized for torture. "Inane regulations", however misguided, generally exist to prevent the Torment Nexus. PE devolves companies into the Torment Nexus to create more profit.

I'm aware that flying was more enjoyable pre reform. And we could make it that enjoyable today by inflating the prices by 50-100%. The food would be better, the seats would be bigger, and planes would be emptier.

But the downside is that flying would be for rich people, just like it was pre-reforms. The poors would have to take trains or drive. Is that a good trade-off?

And to top it off, if you want to pay for a premium flying experience today, you can! For similar prices (to pre-reform flights, in real terms) you can book a "luxury flight".

Like I said, rose colored glasses.

Re: Private equity bought America's essential services

#498

Post by u_fucking_dork »

freejazz wrote: post #395
throwforfeds wrote: post #388

Earlier quoted context omitted.

At least here in NYC, a large part of a NYPD officer's pension is calculated based on a 3-year look back from their retirement date, so there is a huge incentive to work as much overtime as possible in order to bump that number in your last few years of service. There are lots of stories of NYPD handing out easy overtime in massive numbers for each other, particularly when they are about to retire. Teachers are the e…

All seem trivial compared to the money sucked up by billionaires, who seem to do little good for society. I'm not going to get angry at a police officer trying to maximize their retirement when we live in a society that celebrates people like Elon Musk, Jeff Bezos and Mark Zuckerberg.

Two things can be bad, you don’t have to pick.

Re: Private equity bought America's essential services

#499

Post by doom2 »

Aurornis wrote: post #198
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…

> The bad PE phenomenon buyout is annoying, but businesses that become miserable for the customers and employees are not stable long-term businesses

What happens when those businesses are hospitals, for example? I've read too many stories of hospitals getting bought by PE and either shutting down or staying (while offering increasingly poor service). In one outcome, it reduces the accessibility to healthcare. In the other, it forces those most unable to choose to stay with subpar care. In both cases, it's not like other health systems are rushing in to replace what has been lost. We just end up with fewer and shittier hospitals.

Re: Private equity bought America's essential services

#500

Post by subtlejellyfish »

bondarchuk wrote: post #379
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…

I don't get it. If pensions stopped existing, would people stop doing PE even though it's profitable? If it is possible to get outsized returns "because pensions need them" then isn't somebody gonna notice and get those returns anyway, pensions or not?

Maybe... but if pensions are gone, how many entities still exist that will commit to locking up billions of dollars for 5+ years?
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