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Private equity bought America's essential services

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Re: Private equity bought America's essential services

#511

Post by themafia »

Balgair wrote: post #300
scary-size wrote: post #152

Huh, that somehow reminds me of Crassus from Rome [1] > The first ever Roman fire brigade was created by Crassus. Fires were almost a daily occurrence in Rome, and Crassus took advantage of the fact that Rome had no fire department, by creating his own brigade—500 men strong—which rushed to burning buildings at the first cry of alarm. Upon arriving at the scene, however, the firefighters did nothing while Crassus off…

https://en.wikipedia.org/wiki/Battle_of_Carrhae For the curious, above is how Crassus died. TLDR: Got over his skis and mad with power and money. Decides to invade Parthia. Gets wrecked by horse archers. That ends up being typical for Romans, but this was the first-ish time that happened. Some of those captured legionaries may have ended up in China, though it is unlikely. https://en.wikipedia.org/wiki/Liqian#Lost_Ro…

Historia Civilis did a great video on this battle:

https://www.youtube.com/watch?v=bR7VDPUj5AE

Re: Private equity bought America's essential services

#512

Post by ninjagoo »

nemomarx wrote: post #153
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…

Why don't pensions just invest in index funds generally? High required rate of returns or?

> Why don't pensions just invest in index funds generally?

Answering the implied statement - pensions invest in PE only to the tune of about 14%. [1]

[1] https://publicplansdata.org/quick-facts/national/

Re: Private equity bought America's essential services

#513

Post by lmm »

everybodyknows wrote: post #425
cameronh90 wrote: post #310

Earlier quoted context omitted.

That's only possible if the financial system is valuing things systematically incorrectly. IFF a company is truly, honest to god, less valuable than the sum of its parts, then it (or the subset that would have more value to someone else) SHOULD be dismantled, and those resources sold and reallocated to more productive use. You probably make these sorts of decisions in the capacity of your own personal finances withou…

> some institutional sucker will buy the company What sort of institutions would try to take on operating such a business? And when does word get around, and the pool of suckers dry up?

> What sort of institutions would try to take on operating such a business?

Essentially anyone - other PE funds, competitors merging, the general stock market if you take it public. And they're not wrong want to buy it - there's a valuable business there - they're just bad at assessing the right price.

> And when does word get around, and the pool of suckers dry up?

One born every minute. And it's hard to even notice you're being taken for a ride as opposed to mismanaging the business you bought or just being unlucky.

Re: Private equity bought America's essential services

#514

Post by jihadjihad »

usui wrote: post #176
scary-size wrote: post #152

Huh, that somehow reminds me of Crassus from Rome [1] > The first ever Roman fire brigade was created by Crassus. Fires were almost a daily occurrence in Rome, and Crassus took advantage of the fact that Rome had no fire department, by creating his own brigade—500 men strong—which rushed to burning buildings at the first cry of alarm. Upon arriving at the scene, however, the firefighters did nothing while Crassus off…

Nice establishment you got here—be a shame if something happened to it. I wonder if the incidence of fires increased during this time.

Or a side hustle of exorbitant P&C insurance.

Re: Private equity bought America's essential services

#515

Post by greedo »

MisterTea wrote: post #305
yardie wrote: post #195

Earlier quoted context omitted.

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…

> 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…

Barnes and Noble seems to be doing well with their PE ownership. Definitely better than the last few decades of Len Riggio's reign.

Re: Private equity bought America's essential services

#516

Post by jancsika »

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?

> why isn't anyone jumping on that

So you're looking to attract investors with smaller margins on specialized $500k trucks that don't yet exist for a sector already monopolized by PE?

Re: Private equity bought America's essential services

#517

Post by canyp »

jonwachob91 wrote: post #243
smallmancontrov wrote: post #135

Earlier quoted context omitted.

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

elaborate on this line of thought please.

Not OP but a progressive tax generally scales non-linearly to tax higher brackets a higher %. So then you have an increasingly lower / decreasing incentive to make even more money.

Many countries already have a progressive tax on income, but that is irrelevant to business profits.

Re: Private equity bought America's essential services

#518

Post by canyp »

tavavex wrote: post #139
mghackerlady wrote: post #55

Earlier quoted context omitted.

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

Why is this downvoted? To me, it seems like a self-evident conclusion. Even the supporters of the current system would probably agree with it. When you have a system that encourages endless growth at absolutely all costs, while placing no limits at the amount of power a single entity can hold, what other outcome can there be but the biggest players absorbing everything into themselves and using their influence over p…

I don't dispute OP, but Adam Smith's premise was that the free market and "invisible hand" were meant to benefit society as a whole, and the minimal government intervention was there to enforce that. Therefore one could argue that the kind of capitalism we have today is not Smiths's original vision, but rather, a failure to implement that vision.

To be clear, I am not defending the position, and maybe that vision just cannot be implemented in practice, or the premise is wrong, etc. Just trying to answer the question as to why OP might be downvoted. We cannot generally conflate defenders of free-market capitalism with defenders of the existing capitalism. I've heard such arguments before, maybe somebody can elaborate in more detail.

Re: Private equity bought America's essential services

#519

Post by donmcronald »

mbesto wrote: post #482
the_sleaze_ wrote: post #385

Earlier quoted context omitted.

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…

> As long as customers choose services based on quality. If the market doesn't reward this then maybe quality isn't important to the customer. Could be price, location, availability, etc. - PE can absolutely create that value even when they roll up 70% of your local HVAC market.

I think part of it is that as the incentive for new entrants goes up, some of those entrants are downright awful. So, there’s a risk of getting someone terrible, the reward of getting someone awesome, and the existing choice of getting predictable mediocrity.

A lot of small business owners in the trades are pretty bad at the business side of things, even if they do great work.

Re: Private equity bought America's essential services

#520

Post by broknbottle »

MisterTea wrote: post #305
yardie wrote: post #195

Earlier quoted context omitted.

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…

> 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…

It’s interesting how accurate this is to my experience back in like 2015/2016. Almost verbatim the same playbook. If they all utilize the same playbook, it seems like there’s an opportunity to use AI + skills playbook to trim the fat and streamline these PEs firms. I’m sure it could reduce headcount, lower PE management fees, etc
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