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Private equity seems to be a form of cancer that slowly sucks the life out of everything it touches, with a single goal: to grow and spread. Can someone more kn

Private equity seems to be a form of cancer that slowly sucks the life out of everything it touches, with a single goal: to grow and spread. Can someone more knowledgeable please explain to me why I'm wrong?

freetanga 1y ago
Have you seen “Other peoples money” with Danny de Vito? I felt it explains this cancer quite well, 35 years ago.
rpjt 1y ago
Efficiency?
- nine_k 1y ago
  The classic playbook includes making a lot of debt, and then leaving the lenders holding the bag when the company files for bankruptcy. It can only be considered efficient if con artistry is efficient, that is, efficient at taking the money from the hands of people who trust other people "too much".
  - dgrin91 1y ago
    This is over simplistic and if everyone knew this is what happens when PE comes into play then no one would lend to PE-backed companies. Often times these debts can work out.
    - queenkjuul 1y ago
      Work out for the banks and shareholders yeah. Not the company and its employees
nzeid 1y ago
The reason it's easy to conclude that they're evil is because they are almost never committed to preserving or improving the quality of their investees. They are only committed to making money, and that often comes in the form of price gouging and liquidation.
dgrin91 1y ago
(not my views, playing devils advocate) PE strives to make things more efficient from a capital point of view. Business foois making $X in profit, and the PE firm's analysis says the can make X+Y dollars with some changes. This is 'better' because now the capital usage is more efficient and more can be spent in other places - new products, new jobs, new businesses, returns to investors, etc. And of course returns to the PE firm. In principle an efficient economy is important on a macro scale - if all the business are stuck in how they were doing things 30 years ago then we would have reduced innovation and ultimately less jobs. In practice there is of course a lot of money that flows back into the PE boss's pockets and.... thats it.
- OutOfHere 1y ago
  It trades robustness for efficiency. It makes the business/service altogether less robust, unable to withstand shocks, unable to survive the tests of time.
  - cyanydeez 1y ago
    It shortens the outlook from years to months.

freetanga 1y ago

Have you seen “Other peoples money” with Danny de Vito? I felt it explains this cancer quite well, 35 years ago.

rpjt 1y ago

Efficiency?

nine_k 1y ago
The classic playbook includes making a lot of debt, and then leaving the lenders holding the bag when the company files for bankruptcy. It can only be considered efficient if con artistry is efficient, that is, efficient at taking the money from the hands of people who trust other people "too much".
- dgrin91 1y ago
  This is over simplistic and if everyone knew this is what happens when PE comes into play then no one would lend to PE-backed companies. Often times these debts can work out.
  - queenkjuul 1y ago
    Work out for the banks and shareholders yeah. Not the company and its employees

nzeid 1y ago

The reason it's easy to conclude that they're evil is because they are almost never committed to preserving or improving the quality of their investees. They are only committed to making money, and that often comes in the form of price gouging and liquidation.

dgrin91 1y ago

(not my views, playing devils advocate) PE strives to make things more efficient from a capital point of view. Business foois making $X in profit, and the PE firm's analysis says the can make X+Y dollars with some changes. This is 'better' because now the capital usage is more efficient and more can be spent in other places - new products, new jobs, new businesses, returns to investors, etc. And of course returns to the PE firm. In principle an efficient economy is important on a macro scale - if all the business are stuck in how they were doing things 30 years ago then we would have reduced innovation and ultimately less jobs. In practice there is of course a lot of money that flows back into the PE boss's pockets and.... thats it.

OutOfHere 1y ago
It trades robustness for efficiency. It makes the business/service altogether less robust, unable to withstand shocks, unable to survive the tests of time.
- cyanydeez 1y ago
  It shortens the outlook from years to months.