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Private equity bought America's essential services

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Re: Private equity bought America's essential services

#51

Post by adampunk »

sokoloff wrote: post #8
sega_sai wrote: post #3

I simply don't understand why leveraged buy-out(LBO) is allowed in the first place. It is like paying for the company with the money from the company you are buying.

You understand mortgages, though, right? Even 3% or 0% down mortgages?

Yes, those exist in industrialized countries as a result of public policy decisions. We do not have 3 or 0% mortgages because that’s what the market naturally bears or produces: we have it because mortgage debt is backstopped by the state.

It’s possible to “understand” mortgages by understanding that conditions for stable home markets don’t arise by themselves—we collectively make them possible because the outcome is desired—then wonder WTF because what social function is creating conditions for private equity getting us.

Re: Private equity bought America's essential services

#52

Post by amazingamazing »

jgalt212 wrote: post #49
amazingamazing wrote: post #44

Earlier quoted context omitted.

How will that work - for example Y Combinator classes. They cannot be acquired? What about acquihires? Cant stop that - employees have their own agency.

I think 5-15 person employee businesses do not concern trust busters.

Whats the connection between the number of employees and anti trust? Also, there are plenty of YC companies with far more than 15 employees.

Re: Private equity bought America's essential services

#53

Post by AndrewKemendo »

magicalist wrote: post #22
Brushfire wrote: post #5

Why is there so much attention paid to the buyer (private equity) and no attention paid to the folks who sold the businesses to them?

> no attention paid to the folks who sold the businesses to them? Why would the retiring dentist selling their practice be a trust or collusion problem?

Because their customers, who they built a trusting relationship with, get hosed when the owner wants to cash out.

That’s the whole math of it. That cash out comes from the future business increasing profit, which is over the longest term cutting service quality.

Start small biz > be successful > want to retire > find someone to buy biz

There’s a lot of pathways with a giant c corp, almost none for the local successful small biz.

I had a acquaintance sell three local trash companies to LRS which is exactly what happened.

Re: Private equity bought America's essential services

#54

Post by inetknght »

bko wrote: post #46
ses1984 wrote: post #27

Earlier quoted context omitted.

Let’s compare two hypothetical companies. They are equal in every way except one has a $4.5b backlog and one has a $0 backlog. Which company would you rather own?

Not sure. On one hand, a huge backlog means they're not meeting their demand. Operations may not be in order. Everything else is the same so sales and everything else is equal so I guess money is just deferred? Also huge backlog encourages competition and if you can't deliver, you're going to lose. But such a big backlog suggests that they're underpricing. So it may be as simple as increasing price and ramping up you…

Okay, now same question except one small change.

There's only one company: the one with the backlog. The other company either went bankrupt or was bought out and consolidated into the first company.

Re: Private equity bought America's essential services

#55

Post by mghackerlady »

graemep wrote: post #38
N_Lens wrote: post #6

Earlier quoted context omitted.

[flagged]

Its called "free market capitalism". I have been in favour of it for decades: https://pietersz.co.uk/2009/11/fix-capitalism I am somewhat more inclined to some socialist policies now though.

free market capitalism will always end like this though. the end goal of capitalism is the consolidation of all things into a megacorporation or oligarchy that controls everything, creates nothing, and earns infinite money

Re: Private equity bought America's essential services

#56

Post by DangitBobby »

amazingamazing wrote: post #21

Seems strange to me: 1. No one forced these people to sell. Is the idea that you can’t sell to an entity with more money? If you block that good luck with the world economy. 2. If above is ok is the idea that the new owner is inherently worse because they have more money, whereas as the smaller would be OK then where are the new entrants? 3. Going to the article it is clear enough. These industries just are not lucra…

If you own a business and wish to retire, your options are pretty much to sell, pass it on to someone, or dismantle it. I don't know how this is even a question really. Where in the article or the comment section is anyone saying they shouldn't be selling?

Re: Private equity bought America's essential services

#57

Post by Ekaros »

amazingamazing wrote: post #44
dd36 wrote: post #2

End consolidation. Go back to pre-1980s antitrust policy. Encourage competition and bust the trusts.

How will that work - for example Y Combinator classes. They cannot be acquired? What about acquihires? Cant stop that - employees have their own agency.

If the acquirer has too big or dominant position already in the specific sector no. They should not be able to sweep the board of all companies doing single thing.

Re: Private equity bought America's essential services

#58

Post by DangitBobby »

amazingamazing wrote: post #50
consp wrote: post #42

Earlier quoted context omitted.

> but this only works because people complain instead of starting rival business. This reads like fiction. When they corner the market it's of course trivial to just jump in and take that share. No way they will try to be disruptive to you or sue you to hell and back and of course the bank will loan you the pile of money to start a new company since there is no giant corporation to compete with who can squeeze you ou…

Your comment is the one that seems like fiction. You are saying PE is unbeatable? Per the article there is a backlog of orders. What is stopping one of the previous owners from creating another company and taking them? Sue for what exactly? Of course they will be disruptive, that is what competing means.

> What is stopping one of the previous owners from creating another company and taking them?

... they sold the original business to retire??

Re: Private equity bought America's essential services

#59

Post by toomuchtodo »

amazingamazing wrote: post #44
dd36 wrote: post #2

End consolidation. Go back to pre-1980s antitrust policy. Encourage competition and bust the trusts.

How will that work - for example Y Combinator classes. They cannot be acquired? What about acquihires? Cant stop that - employees have their own agency.

If the acquirer attempts to acquire a startup (regardless of investor) for anti trust reasons, or there are anti trust concerns, the M&A activity is disallowed by regulators. A recent example is Figma and Adobe.

https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...

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