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Private equity is buying everything from vet offices to tech conglomerates

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Re: Private equity is buying everything from vet offices to tech conglomerates

#81

Post by alistairSH »

d136o wrote: post #76
alistairSH wrote: post #53

Earlier quoted context omitted.

The worst "foreign call center" experience I've had lately... Hotel check-in. Walked in, lady at desk is read a novel, I ask "can I check in?", she directs me to a video-conference kiosk across the room, which is actively in-use by a high-maintenance customer who, in addition to changing her reservation details, can't understand a fairly light Indian accent. 15 minutes of waiting later, this other customer is still g…

Which hotel?

It was the Quality Inn in Kill Devil Hills, Outer Banks, NC. Typical mediocre beach hotel in that area.

Re: Private equity is buying everything from vet offices to tech conglomerates

#82

Post by SirMaster »

tracerbulletx wrote: post #38
SNosTrAnDbLe wrote: post #5

I have firsthand experience of how PE ruins startups. We were a small startup and unfortunately our founder decided to go with a PE firm rather than a VC firm for a round of funding. The latter were upfront about job cuts but the PE firm did not say anything until them took over. The founder got a good paycheck but we were left holding the bag. There was a bloodbath and they ruined the culture, the product and the mo…

Same thing happened at a company I worked at, they also constantly tell you how they are investing in the future of the company and will not be doing all of the culture destroying things that they are definitely going to do. So if you are in this position and they say it will be different, don't believe them.

It's not always like this.

A PE bought a majority stake in the company I work for which for 40 years was a family owned company.

They said they were financial partners only, non-operational and they bought because they liked how we were.

It's been years since and things have only gotten better as far as I am concerned. I mean they were pretty great originally when the family owned it and I had no complaints, but the culture and engagement and such has only gotten better, and the company is growing faster and becoming even more profitable than ever before as well.

Re: Private equity is buying everything from vet offices to tech conglomerates

#83

Post by paxys »

toast0 wrote: post #43

Private equity leveraged buyouts are an option for companies to change their fate. Typically, they're on a long path towards an slow death. With the buyout, current shareholders get a return, and the company is on a 3-7 year path towards a crisis bankruptcy. It's good for the current shareholders, and it's good for the private equity company. It's not good for the business, but if the old owners and the new owners li…

If the business is (seemingly) on the path to death and current owners are done with it, but employees still want to stay, then the obvious best outcome for the business is to be handed over to the employees. The downside is that there's less money in that for the shareholders and the PE fund, but let's not try to change the narrative to "PE buyouts are best for the business" when they clearly aren't. They are a way to squeeze out as much capital as possible from a company before tossing its carcass, nothing more.

Re: Private equity is buying everything from vet offices to tech conglomerates

#84

Post by CPLX »

toast0 wrote: post #43

Private equity leveraged buyouts are an option for companies to change their fate. Typically, they're on a long path towards an slow death. With the buyout, current shareholders get a return, and the company is on a 3-7 year path towards a crisis bankruptcy. It's good for the current shareholders, and it's good for the private equity company. It's not good for the business, but if the old owners and the new owners li…

Who has standing to object? How about the people that get ripped off.

It’s looting. They’re asset stripping.

They are literally doing this:

https://youtu.be/ZPtjyqgZAUk

It’s not a metaphor what is happening is actually the same as a common organized crime scheme. They are stealing from creditors.

Re: Private equity is buying everything from vet offices to tech conglomerates

#85

Post by eli »

SNosTrAnDbLe wrote: post #5

I have firsthand experience of how PE ruins startups. We were a small startup and unfortunately our founder decided to go with a PE firm rather than a VC firm for a round of funding. The latter were upfront about job cuts but the PE firm did not say anything until them took over. The founder got a good paycheck but we were left holding the bag. There was a bloodbath and they ruined the culture, the product and the mo…

PE acquired us and was a great partner. Allowed us to do larger M&A deals than we otherwise could have. Supportive but mostly stayed out of the way. Never suggested any cuts or anything that would impact culture. Ultimately led to us being acquired by a strategic a few years later in what I think was a good outcome for everyone.

These are all just anecdotes. My experience doesn't override yours, but I'd be careful drawing broad conclusions.

I think sometimes PE gets a bad rap because they can be a "buyer of last resort" for companies that are already struggling.

Re: Private equity is buying everything from vet offices to tech conglomerates

#86

Post by chiph »

curiousllama wrote: post #68
enlyth wrote: post #61

Earlier quoted context omitted.

It's not all black and white, at least from my experience A similar thing to what you described happened at a software company where I used to work at, culture destroyed, many people let go. I will name and shame the PE firm - it was Hg Capital However currently, I've been at a company for a few years who is owned by Morgan Stanley Capital Partners, and it's a completely different story. The culture is great and hasn…

It REALLY matters what kind of PE you’re talking about. Bought by a growth equity fund? Probably fine. Bought as part of a roll up? Probably screwed. PE is like tech: similar tools, but very different firms.

A previous firm I worked at was bought as part of a roll-up (market segment consolidation). If you're the firm that they're rolling all their acquisitions into, that's great & exciting. If you're one of the roll-ees, not so much.

They bought us not for our technology but our customer base. They intended to convert them all to their other firm's product. Little did they know that a lot of our customers had left the other firm for us because we treated them better.. So what happened is in addition to the back office staff & sales staff being laid off, they laid off the developers & testers too (they kept a few managers for a year for continuity). I realized this when the folks they sent to town refused to go to lunch with us in an rather awkward moment.

Re: Private equity is buying everything from vet offices to tech conglomerates

#87

Post by mbesto »

SNosTrAnDbLe wrote: post #5

I have firsthand experience of how PE ruins startups. We were a small startup and unfortunately our founder decided to go with a PE firm rather than a VC firm for a round of funding. The latter were upfront about job cuts but the PE firm did not say anything until them took over. The founder got a good paycheck but we were left holding the bag. There was a bloodbath and they ruined the culture, the product and the mo…

YMMV. Really depends on which PE firm it is. The large cap ones are notorious for what you are describing.

The PE clients I work with are very growth orientated and understand that culture is important for growth, so I don't believe you can paint the whole space with one brushstroke.

Re: Private equity is buying everything from vet offices to tech conglomerates

#88

Post by mbesto »

eli wrote: post #85
SNosTrAnDbLe wrote: post #5

I have firsthand experience of how PE ruins startups. We were a small startup and unfortunately our founder decided to go with a PE firm rather than a VC firm for a round of funding. The latter were upfront about job cuts but the PE firm did not say anything until them took over. The founder got a good paycheck but we were left holding the bag. There was a bloodbath and they ruined the culture, the product and the mo…

PE acquired us and was a great partner. Allowed us to do larger M&A deals than we otherwise could have. Supportive but mostly stayed out of the way. Never suggested any cuts or anything that would impact culture. Ultimately led to us being acquired by a strategic a few years later in what I think was a good outcome for everyone. These are all just anecdotes. My experience doesn't override yours, but I'd be careful dr…

My firm supports 100's of PE acquisitions every year and I can tell you that your experience is far more the norm than what the parent comment has suggested.

Re: Private equity is buying everything from vet offices to tech conglomerates

#89

Post by dmix »

eli wrote: post #85
SNosTrAnDbLe wrote: post #5

I have firsthand experience of how PE ruins startups. We were a small startup and unfortunately our founder decided to go with a PE firm rather than a VC firm for a round of funding. The latter were upfront about job cuts but the PE firm did not say anything until them took over. The founder got a good paycheck but we were left holding the bag. There was a bloodbath and they ruined the culture, the product and the mo…

PE acquired us and was a great partner. Allowed us to do larger M&A deals than we otherwise could have. Supportive but mostly stayed out of the way. Never suggested any cuts or anything that would impact culture. Ultimately led to us being acquired by a strategic a few years later in what I think was a good outcome for everyone. These are all just anecdotes. My experience doesn't override yours, but I'd be careful dr…

If PE ruined more businesses than it helped then people wouldn’t be doing PE (either the finance guys or the companies).

So technically there should be more wins than not. At least on paper. How that looks for lower level employees may be different but often PE is there for a reason.

Re: Private equity is buying everything from vet offices to tech conglomerates

#90

Post by oatmeal1 »

linuxftw wrote: post #56
toast0 wrote: post #43

Private equity leveraged buyouts are an option for companies to change their fate. Typically, they're on a long path towards an slow death. With the buyout, current shareholders get a return, and the company is on a 3-7 year path towards a crisis bankruptcy. It's good for the current shareholders, and it's good for the private equity company. It's not good for the business, but if the old owners and the new owners li…

The problem lies in where the money comes from the execute taking the company private. A big bank will issue the debt, then peddle the debt as AAA rated into all of America's 401k's via their friends at the brokerages. You think the banks are just sitting on those debts hoping to make it to maturity? And it's never the PE firm that owes the debt, they're able to get paid back by the thing they buy, and that shell owe…

> A big bank will issue the debt, then peddle the debt as AAA rated into all of America's 401k's via their friends at the brokerages.

Do you have any links about this? I'd like to learn more about how this scheme works.

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