23 ms·

Has private equity ever done anything good for anyone outside of the investors?

regera 10mo ago
Not yet. Sometimes employees if they get second bite of the big apple. PE do well in capital-intensive sectors. I'm not sure if their playbook fits the real needs of dollar stores. Instead of focusing on things like debt and aggressive cost cuts, most customers just want fair prices, stocked shelves, clean stores, friendly cashiers and basic respect—things that PE firms often ignore. In DFW, I was surprised to see 1-2 person dollar stores!
jahsome 10mo ago
To me, that is an utterly hilarious question to be posing on this website of all places.
- excalibur 10mo ago
  That's a good point. Private Equity is a fairly broad umbrella term that encompasses a variety of investment strategies and business models. The type of Private Equity that most here are referring to is the type that buys up existing businesses, squeezes as much money as possible out of them, and throws their desecrated corpses in the gutter. These "investors" are a blight on society, this activity should be criminalized, they should be in prison. But there are a lot of well-meaning investors who do great things for society that also get stuck with the same label.
  - chongli 10mo ago
    Just like crows! People hate crows even though they play a valuable role in ecosystems. I would argue that moribund businesses who maintain a competitive moat but are otherwise extremely unproductive and inefficient are the real blight on society. If PE firms can liquidate those businesses and open up the market while freeing up capital for more productive investment then I fully support them. I would love to hear some counterexamples though. Productive and innovative businesses with really solid fundamentals (balance sheets) that were acquired and dismantled by PE.
    - andrew_lettuce 10mo ago
      Red Lobster?
      - chongli 10mo ago
        Weren't they losing money for years on all-you-can-eat seafood specials [1]? It's not uncommon in the fast food business to be breaking even or losing money on all aspects of the business while the true value of the company, its real estate portfolio, steadily grows. The fact that investors decided they wanted to cash out should be a surprise to no one. [1] https://www.fastcompany.com/91129776/what-really-killed-red-lobster-bankruptcy-private-equity https://www.fastcompany.com/91129776/what-really-killed-red-...
    - bkor 10mo ago
      > Productive and innovative businesses with really solid fundamentals (balance sheets) that were acquired and dismantled by PE. You have way too much (unneeded) limiting qualifications. In Netherlands PE have bought loads of companies, then put the acquisition price as a loan on the balance sheet. Plus then sold the assets, made the company then lease those assets. Then those companies often went bankrupt as the leasing prices increased crazily. > I would argue that moribund businesses who maintain a competitive moat but are otherwise extremely unproductive and inefficient are the real blight on society. The companies I've cited weren't "extremely unproductive and inefficient". Businesses can be profitable and healthy without all the qualifications you think they need.
    - BeFlatXIII 10mo ago
      Do they do actual damage, or is this egghead economic theory?
  - mbesto 10mo ago
    > The type of Private Equity that most here are referring to is the type that buys up existing businesses, squeezes as much money as possible out of them, and throws their desecrated corpses in the gutter. And this type of PE represents a very small minority of what is actually considered "Private Equity". The vast majority of PE deals are about growth. This small minority of asset stripping PE groups gets the most headlines though. Source: my firm works with ~400 PE firms.
chongli 10mo ago
Private equity are the crows of the economy. They pick off weak / dysfunctional businesses and open space for fresh competition (or for other markets to open up).
- hellotheretoday 10mo ago
  this would be somewhat arguable as okay except for their introduction into categories like daycare, emergency rooms, drug and alcohol rehab, care homes for the geriatric and disabled, etc. things that probably shouldn’t be profit oriented to begin with yet are and are being snatched up by private equity, worsening outcomes in basically all of them
  - luckylion 10mo ago
    "shouldn't be profit oriented" is another way to say "costs will quickly grow exponentially", because there's absolutely no incentive not to let them. Is anyone better off if elderly care becomes too expensive to offer at scale?
    - collingreen 10mo ago
      1: "Shouldn't be profit oriented" 2: ??? 3: "too expensive to offer at scale"
    - TylerE 10mo ago
      Except that Americans pay far more for these services than places where they aren't profit oriented. Try again. Reality does not support your assertion.
- venturecruelty 10mo ago
  How do I travel to the alternate universe where private equity apparently makes things better instead of worse?
  - pfdietz 10mo ago
    You stay in this one. If PE wasn't producing value it would disappear. What, you think people dump money into PE because they want to twirl their villainous moustaches?
gruez 10mo ago
I'm not sure why private equity is singled out here, when every time a public company does a bad (eg. Boeing), people crow about how public companies only care about juicing next quarter's earnings.
- venturecruelty 10mo ago
  Galaxy brain: both are bad, although at least a public company is, ostensibly, trying to make a good or provide a service (lol).
  - gruez 10mo ago
    >although at least a public company is, ostensibly, trying to make a good or provide a service (lol). /s?
    - venturecruelty 10mo ago
      No? Companies aren't about making things anymore, they're about stock buybacks and making as much money as possible while doing as little as possible (or selling our data). That's why the refrigerators have ads and break after two years. At least private equity is more honest about being vulchers, whereas Kohler is going to look you dead in the eyes and try to convince you you need a toilet with a camera in it. What a joke.
      - gruez 10mo ago
        >At least private equity is more honest about being vulchers, Again, what's the basis of this? Half the people in this thread seem to take it for granted that PE is somehow "worse" than public companies, but can't seem to articulate why. The only legal difference between public companies and "private equity" is that the former has stricter reporting requirements and can be bought by non-accredited investors. There's nothing about "ostensibly, trying to make a good or provide a service" or whatever.
        10mo ago
eagleinparadise 10mo ago
So I work in commercial real estate, obviously a large private equity influenced industry. I've worked in REPE and in other capacities. There's degrees of PE. Some good, fine, and some worse. Take real estate development. It's probably one of the suckiest businesses to be in. I know 3 developers who have committed suicide because when things go wrong, your entire life collapses (you put up all your assets in order to obtain construction loans). The litigation, brain damage, and risks are enormous. Increasingly, the payoff is awful (due to worsening legislation and NIMBYism and worse market condiditions) However, private equity in development I think is a good thing. When there are investors willing to put this money at risk, we get much needed construction of housing (see Austin, TX where rents are falling off a cliff due to over building). Now look at Los Angeles, which new permits are literally almost non-existent because LA is one of the most hostile places for developers. You can't make money in LA, so there's no capital available. Then you end up with "affordable" housing developers adding the only supply at $600-900k/unit costs vs the market rate developer at $300-600k/unit. ---- On the other hand, "value add" private equity is much more suspicious. It's more cut throat, easier to end up in crony capitalist situations by operating with a "cut expenses, provide less, make big bucks" model. The people in this world are the kind of guys who have never done anything hard with their hands other than gotten a sore thumb from pounding too hard on their keyboards to adjust their excel model ("Mr. The Model is Always Right") too hard all night long. This is how we end up with old properties who get flipped 4x each being sold with "upside the seller was too stupid to take advantage of" and ending up in situations where tenants get priced out due to private equity seeking infinite growing returns. Oh and by the way, every previous owner did "lipstick on the pig" jobs because why not try to save costs and make your levered IRR 16% instead of 12%? You cannot show that kind of return when you promised 18%... then it'll make it harder to fundraise your next deal! This isn't to say that "value add" is a dirty business. We certainly need to balance the incentive to modernize and renovate properties. An d developers overbuilding isn't always a good thing. So its nuanced. I think people need to fairly give credit that there are both good and bad. The capital efficiency is real and produces real world outcomes since there is a strong financial incentive at the end of the door. But financial incentives sometimes bump up to issues causing harm in real life, which need to be recognized and called out.
holysoles 10mo ago
In general I have a pretty negative view of private equity. However I did see this awhile back that seems at least partially positive: https://www.cnbc.com/2023/07/27/private-equity-giant-kkrs-antidote-to-worker-discontent-employee-stock-ownership-programs.html https://www.cnbc.com/2023/07/27/private-equity-giant-kkrs-an...
WarOnPrivacy 10mo ago
> Has private equity ever done anything good for anyone outside of the investors? If it's not publicly traded, it's super secure from any public accountability. And while I'm increasingly hostile toward the shareholder model, we do get one transparency breadcrumb from this (gov managed) contrivance: The Earnings Call Earnings Calls give us worthwhile amounts of internal information that we'd never get otherwise - info that often conflicts with public statements and reports to govs. Like CapEx expenditures/forecast and the actual reasons that certain segments over/underperform. It's a solid way to catch corporations issuing bald-faced lies (for any press, public, gov that are paying attention). AT&T PR: Net Neutrality is tanking our infra investment ATT's EC: CapEx is high and that will continue I'll bet 1 share that there are moves to get this admin to do away with the requirement.
- GolfPopper 10mo ago
  >If it's not publicly traded, it's super secure from any public accountability. Under the existing legal and regulatory model, yes. But what abusing that model long-term will eventually result in government-level change that effectively bans the existence of such exploits, wide-spread vigilantism, and/or some sort of collapse.
  - JumpCrisscross 10mo ago
    > what abusing that model long-term will eventually result in government-level change that effectively bans the existence of such exploits, wide-spread vigilantism, and/or some sort of collapse The endpoint of vigilantism and collapse is more economic opacity. Not less. My personal view is companies with more than any of 1,000 employees, $10mm revenue or a $100mm valuation should have to file a simple annual disclosure showing the cap table ad balance sheet, a simple P/L, list of >5% beneficial owners and their auditor. But the path to that is through legislation in a complex, stable society.
    - AnthonyMouse 10mo ago
      Those are single-member LLC revenue numbers. You can get $10M in revenue just by being in a low-margin business. For industries with a 1% margin that's $100k a year in net income, i.e. wages and benefits for one person. And how are you going to calculate valuation for a closely held private company? In particular, how are you going to calculate it without making them do the thing you don't know if they're required to do without having the calculation already?
xhkkffbf 10mo ago
Why is private equity different from any other form of organization? Publicly traded companies are even more addicted to getting revenue. Non-profits like universities may not have shareholders, but somehow the price of tuition keeps skyrocketing even faster than the prices at the dollar stores. And it's not like the religious charities have been pure.
JumpCrisscross 10mo ago
> Has private equity ever done anything good for anyone outside of the investors? Yes. Productivity typically goes up [1]. Its reputation for job cutting is overblown [2], as is its record on price increases [3]. And historically, it's tended to decrease concentration in the industries it operates in. (The conglomerate break-ups of the 1980s were fuelled by new entrants and carve-outs.) Instead, what I think we have is a category error. Berkshire Hathaway is a private equity shop as is all venture capital [4], and most family businesses of any scale are structured identically to sponsor-owned firms. Meanwhile, LBOs have been unable to shake the private-equity label for decades, unless they're lead by a founder, in which case they're "take private" transactions. In essence, we brand failed alternative asset strategies as private equity ex post facto. Moreover, transaction size is negatively correlated with returns, particularly for leveraged buyouts. So the biggest private equity deals, which represent a minority of transaction activity, are disproportionately (a) bad and (b) public. Finally, we get a lot of false conflation of market failures to private equity per se. Private-equity owned hospitals are bad [5]. But I haven't seen great evidence they're worse than other privately-owned hospitals with similar scale. The problem is hospitals probably shouldn't be run for profit or on-locally. But because nobody in particular is defending private equity, that's easier to attack. [1] https://www.hbs.edu/faculty/Pages/item.aspx?num=67233 https://www.hbs.edu/faculty/Pages/item.aspx?num=67233 [2] https://www.jstor.org/stable/43495362 https://www.jstor.org/stable/43495362 [3] https://centers.tuck.dartmouth.edu/uploads/cpee/files/Is_Private_Equity_Good_for_Consumers.pdf https://centers.tuck.dartmouth.edu/uploads/cpee/files/Is_Pri... [4] https://en.wikipedia.org/wiki/Early_history_of_private_equity#Origins_of_modern_private_equity https://en.wikipedia.org/wiki/Early_history_of_private_equit... [5] https://jamanetwork.com/journals/jama/fullarticle/2813379#google_vignette https://jamanetwork.com/journals/jama/fullarticle/2813379#go...
- epsteingpt 10mo ago
  The question anyone reading this analysis should ask is: if private equity is so benign, where do the returns come from? The unlock, which these papers don't understand, is the extractive nature of P/E that is hidden. A few clues: 1. A .5%-1% increase in prices is meaningful (Overall industry prices rise after buyouts, but again the price increase is on average very modest.) Retails margins routinely are measured in fractions of percentage points (bps). As an example, even if overall hospital prices stayed similar, P/E firms have been caught jacking up prices on people who need it most. Research on "Surprise Billing" in emergency rooms spiked immediately after PE firms took over staffing groups. Are you surprised? 2. Equity multiples are "effectively" a form of stealing from retail / pension plans: this is where the real 'theft' happens (if you want to call it that). If you reraterevenue from 6x (private) to 15-20x, someone is now paying 2-3x more per dollar to have that company in society. The key is the P/E OWNERS reap that value, so even if there are no job cuts, the wealth being created aggregates 'money supply' to the owners. This has downstream impacts on inflation. 3. Independent of aggregate effects - local effects are quite devastating. This is not P/E's fault, but closing down plants can kill towns for good. The question here is ownership - a family feels some tie to the community to attempt to help their friends and neighbors. P/E absolutely destroys this tie - the subtle but measurable effects compound. Finally, even if you like P/E as a VEHICLE (which - I would argue it hasn't been a 'good' ones since like the late 90s), you can't ignore the fact that it's returns have largely been eaten by fees. You're right to say that P/E is just playing the market. That doesn't mean that its impact on society has been good - the entire reason we're in the current political and economic situation we are today are by following the 'laws of the market' which have hollowed out the middle class and created a pretty large affordability crisis despite the world having achieved record levels of wealth. The transfer from 'doers' to 'owners' has been a net negative for American society, and one of the primary reasons we don't 'build' things anymore - it's just not capitally "efficient"
tpmoney 10mo ago
If you're a Dell customer, Michael Dell taking the company private again seems to have done wonders for them.
- danans 10mo ago
  Dell has been a publicly traded company again since 2018.
jimmydddd 10mo ago
It seems to offer interesting opportunities for young recent high level MBA's.
adolph 10mo ago
> Has private equity ever done anything good for anyone outside of the investors? This is a bit like asking if public equity has ever done anything good for anyone outside of its investors. It really depends on what is meant by "anything good." Has any company that has taken venture capital (a variety of private equity) ever done anything good for anyone outside the VCs? Private equity is more often associated with late stage takeovers and reorganizations than with startups, however. An example might be the privatization and refocus of Dell. Was a refreshed Dell good for its workforce and customers? https://www.wallstreetoasis.com/forum/private-equity/the-leading-research-journal-for-the-operating-side-of-private-equity-covering https://www.wallstreetoasis.com/forum/private-equity/the-lea...
bawolff 10mo ago
In theory it helps people who have some sort of trade and just want to do that trade, focus on that, while the business experts from the PE firm handle the business side. Running a business is a skill, and people who want to sell some other skill often don't have it as you can't be good at everything. Are there other ways of addressing that gap, like hiring experts? Sure, but its not like PE is entirely evil. Keep in mind there is some selection bias here. You only hear about private equity when its being comic book evil. When things work out or its a non scummy PE company, you never hear about it.
bloppe 10mo ago
If you have a pension, you're an investor in PE. If you live in a country with a sovereign wealth fund, you're a beneficiary of PE. If you're connected to a school with an endowment, a lot of that money ends up in PE funds, and can fund lots of research and student resources. So ya, I'd agree the PE is rarely good for anyone but the investors, but you'd be surprised how many people are investors without realizing it.
- AnthonyMouse 10mo ago
  If all of those things never invested a cent in private equity funds that buy up existing companies to turn the screws on their customers and put the money into new business creation instead, they wouldn't be making any less money and the whole world would be better off, including the investors themselves in their role as customers and employees.
blitzar 10mo ago
vc, private equity; potayto, potahto
gadders 10mo ago
I can't think of a single example. It normally means making a company worse whilst relying on existing name recognition to drive sales with the aim of re-selling it before people realise how bad the company has begun.
epolanski 10mo ago
Private equity has rarely done good for investors too. With the boom of popularity of ETFs in the last decades it has been increasingly hard for active fund managers to justify their costs by investing on public markets where benchmarks are visible and public. Thus they removed themselves from the benchmark entirely and moved to private equity where there's no benchmark and returns are very hard to gauge. Analysis shows that: - The overwhelming majority of PEs lose money. - Annualized return of PE in UK has been 2.1%, this doesn't even match parking money in short-term bonds. - PE performance is extremely murky, as their gains are virtual and whether you exit profitably is heavily dependent on your timing - The entire sector is ripe with corruption and little regulatory oversight. PEs keep ballooning their holdings valuations by essentially trading companies among themselves. So fund A sells Acme to to fund B at twice the valuation, and will return the favour by buying Foobar at inflated valuation. This all obviously requires access to cheap credit. Many startups are approached by PEs that have already lined up to sell the startup to another PE after few years guaranteeing everybody (from founders to all the PE managers) nice profits, up to the last sucker stuck with the bill. The only ones that have profited out of PE, beyond the managers working there, are those that invested in the PE itself, meaning buying shares of the fund itself.
- disgruntledphd2 10mo ago
  I mean, their counter-parties know all of this, but the fact that PE assets don't need to be marked to market on a regular basis can be good for a lot of these investors, as it introduces a delay in the spiral that can otherwise occur with public assets. Like, if AI collapses, everyone's gonna sell Treasuries to cover losses as they are super liquid (mostly), but the PE assets can pretend that they're still worth whatever, thus reducing margin calls. PE is generally bad, but their LP's are not entirely stupid and the ability to mark to imagination is worth a bunch of money sometimes.
- mbesto 10mo ago
  Are you referring to Private Equity (as in MBOs/LBOs) or Venture Capital? None of what you're stating is rooted in reality or data. Source: https://www.bain.com/globalassets/noindex/2025/bain-report_global-private-equity-report-2025.pdf https://www.bain.com/globalassets/noindex/2025/bain-report_g... > - The overwhelming majority of PEs lose money. What? No. Read the report: "Buyout funds continue to outperform public markets in all regions across time horizons longer than five years" > - Annualized return of PE in UK has been 2.1%, this doesn't even match parking money in short-term bonds. Once again, read the report. > The only ones that have profited out of PE, beyond the managers working there, are those that invested in the PE itself, meaning buying shares of the fund itself. I sold my business to PE and I profited nicely. So I'm not sure what you're concluding here... Take the parent's post with a grain of salt.
pembrook 10mo ago
I assume you're asking this rhetorically and just want people to affirm how 'evil' private equity is to support the narrative-driven belief you already have? PE became a favorite journalist boogeyman in the 80s for saddling companies with high interest debt they could never repay or slicing up industrial companies and selling for parts. That's not reality today. A vast majority of private equity buyouts nobody ever hears about or cares about because everything turns out totally fine. A private equity buyout that makes the company worse off, destroys customer trust, kills employee loyalty, and leaves room for competitors to swoop in is a failed private equity buyout. If that were true in the majority of cases the entire PE model wouldn't work at all. Here's just a few success stories of companies you've heard of (there's thousands you haven't heard of, so no point in bringing them up). - Hilton Hotels - Dunkin Brands - Beats by Dre - Dominos Pizza - Petsmart / Chewy Businesses that sell to private equity are often businesses that are not doing well or are not long-term sustainable, hence why the owner wants to sell. Think about it logically. If you're running a fantastic business that is profitable, growing, sustainable, with happy employees -- why would you sell?? Or in the case of public companies being taken private, why would anybody take the risk if everything is going wonderfully?
satvikpendem 10mo ago
Valve is private equity and seems to do a lot of good things, for gamers and for Linux users in general.

regera 10mo ago

Not yet. Sometimes employees if they get second bite of the big apple. PE do well in capital-intensive sectors. I'm not sure if their playbook fits the real needs of dollar stores. Instead of focusing on things like debt and aggressive cost cuts, most customers just want fair prices, stocked shelves, clean stores, friendly cashiers and basic respect—things that PE firms often ignore. In DFW, I was surprised to see 1-2 person dollar stores!

jahsome 10mo ago

To me, that is an utterly hilarious question to be posing on this website of all places.

excalibur 10mo ago
That's a good point. Private Equity is a fairly broad umbrella term that encompasses a variety of investment strategies and business models. The type of Private Equity that most here are referring to is the type that buys up existing businesses, squeezes as much money as possible out of them, and throws their desecrated corpses in the gutter. These "investors" are a blight on society, this activity should be criminalized, they should be in prison. But there are a lot of well-meaning investors who do great things for society that also get stuck with the same label.
- chongli 10mo ago
  Just like crows! People hate crows even though they play a valuable role in ecosystems. I would argue that moribund businesses who maintain a competitive moat but are otherwise extremely unproductive and inefficient are the real blight on society. If PE firms can liquidate those businesses and open up the market while freeing up capital for more productive investment then I fully support them. I would love to hear some counterexamples though. Productive and innovative businesses with really solid fundamentals (balance sheets) that were acquired and dismantled by PE.
  - andrew_lettuce 10mo ago
    Red Lobster?
    - chongli 10mo ago
      Weren't they losing money for years on all-you-can-eat seafood specials [1]? It's not uncommon in the fast food business to be breaking even or losing money on all aspects of the business while the true value of the company, its real estate portfolio, steadily grows. The fact that investors decided they wanted to cash out should be a surprise to no one. [1] https://www.fastcompany.com/91129776/what-really-killed-red-lobster-bankruptcy-private-equity https://www.fastcompany.com/91129776/what-really-killed-red-...
  - bkor 10mo ago
    > Productive and innovative businesses with really solid fundamentals (balance sheets) that were acquired and dismantled by PE. You have way too much (unneeded) limiting qualifications. In Netherlands PE have bought loads of companies, then put the acquisition price as a loan on the balance sheet. Plus then sold the assets, made the company then lease those assets. Then those companies often went bankrupt as the leasing prices increased crazily. > I would argue that moribund businesses who maintain a competitive moat but are otherwise extremely unproductive and inefficient are the real blight on society. The companies I've cited weren't "extremely unproductive and inefficient". Businesses can be profitable and healthy without all the qualifications you think they need.
  - BeFlatXIII 10mo ago
    Do they do actual damage, or is this egghead economic theory?
- mbesto 10mo ago
  > The type of Private Equity that most here are referring to is the type that buys up existing businesses, squeezes as much money as possible out of them, and throws their desecrated corpses in the gutter. And this type of PE represents a very small minority of what is actually considered "Private Equity". The vast majority of PE deals are about growth. This small minority of asset stripping PE groups gets the most headlines though. Source: my firm works with ~400 PE firms.

chongli 10mo ago

Private equity are the crows of the economy. They pick off weak / dysfunctional businesses and open space for fresh competition (or for other markets to open up).

hellotheretoday 10mo ago
this would be somewhat arguable as okay except for their introduction into categories like daycare, emergency rooms, drug and alcohol rehab, care homes for the geriatric and disabled, etc. things that probably shouldn’t be profit oriented to begin with yet are and are being snatched up by private equity, worsening outcomes in basically all of them
- luckylion 10mo ago
  "shouldn't be profit oriented" is another way to say "costs will quickly grow exponentially", because there's absolutely no incentive not to let them. Is anyone better off if elderly care becomes too expensive to offer at scale?
  - collingreen 10mo ago
    1: "Shouldn't be profit oriented" 2: ??? 3: "too expensive to offer at scale"
  - TylerE 10mo ago
    Except that Americans pay far more for these services than places where they aren't profit oriented. Try again. Reality does not support your assertion.
venturecruelty 10mo ago
How do I travel to the alternate universe where private equity apparently makes things better instead of worse?
- pfdietz 10mo ago
  You stay in this one. If PE wasn't producing value it would disappear. What, you think people dump money into PE because they want to twirl their villainous moustaches?

gruez 10mo ago

I'm not sure why private equity is singled out here, when every time a public company does a bad (eg. Boeing), people crow about how public companies only care about juicing next quarter's earnings.

venturecruelty 10mo ago
Galaxy brain: both are bad, although at least a public company is, ostensibly, trying to make a good or provide a service (lol).
- gruez 10mo ago
  >although at least a public company is, ostensibly, trying to make a good or provide a service (lol). /s?
  - venturecruelty 10mo ago
    No? Companies aren't about making things anymore, they're about stock buybacks and making as much money as possible while doing as little as possible (or selling our data). That's why the refrigerators have ads and break after two years. At least private equity is more honest about being vulchers, whereas Kohler is going to look you dead in the eyes and try to convince you you need a toilet with a camera in it. What a joke.
    - gruez 10mo ago
      >At least private equity is more honest about being vulchers, Again, what's the basis of this? Half the people in this thread seem to take it for granted that PE is somehow "worse" than public companies, but can't seem to articulate why. The only legal difference between public companies and "private equity" is that the former has stricter reporting requirements and can be bought by non-accredited investors. There's nothing about "ostensibly, trying to make a good or provide a service" or whatever.
      - 10mo ago

eagleinparadise 10mo ago

So I work in commercial real estate, obviously a large private equity influenced industry. I've worked in REPE and in other capacities. There's degrees of PE. Some good, fine, and some worse. Take real estate development. It's probably one of the suckiest businesses to be in. I know 3 developers who have committed suicide because when things go wrong, your entire life collapses (you put up all your assets in order to obtain construction loans). The litigation, brain damage, and risks are enormous. Increasingly, the payoff is awful (due to worsening legislation and NIMBYism and worse market condiditions) However, private equity in development I think is a good thing. When there are investors willing to put this money at risk, we get much needed construction of housing (see Austin, TX where rents are falling off a cliff due to over building). Now look at Los Angeles, which new permits are literally almost non-existent because LA is one of the most hostile places for developers. You can't make money in LA, so there's no capital available. Then you end up with "affordable" housing developers adding the only supply at $600-900k/unit costs vs the market rate developer at $300-600k/unit. ---- On the other hand, "value add" private equity is much more suspicious. It's more cut throat, easier to end up in crony capitalist situations by operating with a "cut expenses, provide less, make big bucks" model. The people in this world are the kind of guys who have never done anything hard with their hands other than gotten a sore thumb from pounding too hard on their keyboards to adjust their excel model ("Mr. The Model is Always Right") too hard all night long. This is how we end up with old properties who get flipped 4x each being sold with "upside the seller was too stupid to take advantage of" and ending up in situations where tenants get priced out due to private equity seeking infinite growing returns. Oh and by the way, every previous owner did "lipstick on the pig" jobs because why not try to save costs and make your levered IRR 16% instead of 12%? You cannot show that kind of return when you promised 18%... then it'll make it harder to fundraise your next deal! This isn't to say that "value add" is a dirty business. We certainly need to balance the incentive to modernize and renovate properties. An d developers overbuilding isn't always a good thing. So its nuanced. I think people need to fairly give credit that there are both good and bad. The capital efficiency is real and produces real world outcomes since there is a strong financial incentive at the end of the door. But financial incentives sometimes bump up to issues causing harm in real life, which need to be recognized and called out.

holysoles 10mo ago

In general I have a pretty negative view of private equity. However I did see this awhile back that seems at least partially positive: https://www.cnbc.com/2023/07/27/private-equity-giant-kkrs-antidote-to-worker-discontent-employee-stock-ownership-programs.html https://www.cnbc.com/2023/07/27/private-equity-giant-kkrs-an...

WarOnPrivacy 10mo ago

> Has private equity ever done anything good for anyone outside of the investors? If it's not publicly traded, it's super secure from any public accountability. And while I'm increasingly hostile toward the shareholder model, we do get one transparency breadcrumb from this (gov managed) contrivance: The Earnings Call Earnings Calls give us worthwhile amounts of internal information that we'd never get otherwise - info that often conflicts with public statements and reports to govs. Like CapEx expenditures/forecast and the actual reasons that certain segments over/underperform. It's a solid way to catch corporations issuing bald-faced lies (for any press, public, gov that are paying attention). AT&T PR: Net Neutrality is tanking our infra investment ATT's EC: CapEx is high and that will continue I'll bet 1 share that there are moves to get this admin to do away with the requirement.

GolfPopper 10mo ago
>If it's not publicly traded, it's super secure from any public accountability. Under the existing legal and regulatory model, yes. But what abusing that model long-term will eventually result in government-level change that effectively bans the existence of such exploits, wide-spread vigilantism, and/or some sort of collapse.
- JumpCrisscross 10mo ago
  > what abusing that model long-term will eventually result in government-level change that effectively bans the existence of such exploits, wide-spread vigilantism, and/or some sort of collapse The endpoint of vigilantism and collapse is more economic opacity. Not less. My personal view is companies with more than any of 1,000 employees, $10mm revenue or a $100mm valuation should have to file a simple annual disclosure showing the cap table ad balance sheet, a simple P/L, list of >5% beneficial owners and their auditor. But the path to that is through legislation in a complex, stable society.
  - AnthonyMouse 10mo ago
    Those are single-member LLC revenue numbers. You can get $10M in revenue just by being in a low-margin business. For industries with a 1% margin that's $100k a year in net income, i.e. wages and benefits for one person. And how are you going to calculate valuation for a closely held private company? In particular, how are you going to calculate it without making them do the thing you don't know if they're required to do without having the calculation already?

xhkkffbf 10mo ago

Why is private equity different from any other form of organization? Publicly traded companies are even more addicted to getting revenue. Non-profits like universities may not have shareholders, but somehow the price of tuition keeps skyrocketing even faster than the prices at the dollar stores. And it's not like the religious charities have been pure.

JumpCrisscross 10mo ago

> Has private equity ever done anything good for anyone outside of the investors? Yes. Productivity typically goes up [1]. Its reputation for job cutting is overblown [2], as is its record on price increases [3]. And historically, it's tended to decrease concentration in the industries it operates in. (The conglomerate break-ups of the 1980s were fuelled by new entrants and carve-outs.) Instead, what I think we have is a category error. Berkshire Hathaway is a private equity shop as is all venture capital [4], and most family businesses of any scale are structured identically to sponsor-owned firms. Meanwhile, LBOs have been unable to shake the private-equity label for decades, unless they're lead by a founder, in which case they're "take private" transactions. In essence, we brand failed alternative asset strategies as private equity ex post facto. Moreover, transaction size is negatively correlated with returns, particularly for leveraged buyouts. So the biggest private equity deals, which represent a minority of transaction activity, are disproportionately (a) bad and (b) public. Finally, we get a lot of false conflation of market failures to private equity per se. Private-equity owned hospitals are bad [5]. But I haven't seen great evidence they're worse than other privately-owned hospitals with similar scale. The problem is hospitals probably shouldn't be run for profit or on-locally. But because nobody in particular is defending private equity, that's easier to attack. [1] https://www.hbs.edu/faculty/Pages/item.aspx?num=67233 https://www.hbs.edu/faculty/Pages/item.aspx?num=67233 [2] https://www.jstor.org/stable/43495362 https://www.jstor.org/stable/43495362 [3] https://centers.tuck.dartmouth.edu/uploads/cpee/files/Is_Private_Equity_Good_for_Consumers.pdf https://centers.tuck.dartmouth.edu/uploads/cpee/files/Is_Pri... [4] https://en.wikipedia.org/wiki/Early_history_of_private_equity#Origins_of_modern_private_equity https://en.wikipedia.org/wiki/Early_history_of_private_equit... [5] https://jamanetwork.com/journals/jama/fullarticle/2813379#google_vignette https://jamanetwork.com/journals/jama/fullarticle/2813379#go...

epsteingpt 10mo ago
The question anyone reading this analysis should ask is: if private equity is so benign, where do the returns come from? The unlock, which these papers don't understand, is the extractive nature of P/E that is hidden. A few clues: 1. A .5%-1% increase in prices is meaningful (Overall industry prices rise after buyouts, but again the price increase is on average very modest.) Retails margins routinely are measured in fractions of percentage points (bps). As an example, even if overall hospital prices stayed similar, P/E firms have been caught jacking up prices on people who need it most. Research on "Surprise Billing" in emergency rooms spiked immediately after PE firms took over staffing groups. Are you surprised? 2. Equity multiples are "effectively" a form of stealing from retail / pension plans: this is where the real 'theft' happens (if you want to call it that). If you reraterevenue from 6x (private) to 15-20x, someone is now paying 2-3x more per dollar to have that company in society. The key is the P/E OWNERS reap that value, so even if there are no job cuts, the wealth being created aggregates 'money supply' to the owners. This has downstream impacts on inflation. 3. Independent of aggregate effects - local effects are quite devastating. This is not P/E's fault, but closing down plants can kill towns for good. The question here is ownership - a family feels some tie to the community to attempt to help their friends and neighbors. P/E absolutely destroys this tie - the subtle but measurable effects compound. Finally, even if you like P/E as a VEHICLE (which - I would argue it hasn't been a 'good' ones since like the late 90s), you can't ignore the fact that it's returns have largely been eaten by fees. You're right to say that P/E is just playing the market. That doesn't mean that its impact on society has been good - the entire reason we're in the current political and economic situation we are today are by following the 'laws of the market' which have hollowed out the middle class and created a pretty large affordability crisis despite the world having achieved record levels of wealth. The transfer from 'doers' to 'owners' has been a net negative for American society, and one of the primary reasons we don't 'build' things anymore - it's just not capitally "efficient"

tpmoney 10mo ago

If you're a Dell customer, Michael Dell taking the company private again seems to have done wonders for them.

danans 10mo ago
Dell has been a publicly traded company again since 2018.

jimmydddd 10mo ago

It seems to offer interesting opportunities for young recent high level MBA's.

adolph 10mo ago

> Has private equity ever done anything good for anyone outside of the investors? This is a bit like asking if public equity has ever done anything good for anyone outside of its investors. It really depends on what is meant by "anything good." Has any company that has taken venture capital (a variety of private equity) ever done anything good for anyone outside the VCs? Private equity is more often associated with late stage takeovers and reorganizations than with startups, however. An example might be the privatization and refocus of Dell. Was a refreshed Dell good for its workforce and customers? https://www.wallstreetoasis.com/forum/private-equity/the-leading-research-journal-for-the-operating-side-of-private-equity-covering https://www.wallstreetoasis.com/forum/private-equity/the-lea...

bawolff 10mo ago

In theory it helps people who have some sort of trade and just want to do that trade, focus on that, while the business experts from the PE firm handle the business side. Running a business is a skill, and people who want to sell some other skill often don't have it as you can't be good at everything. Are there other ways of addressing that gap, like hiring experts? Sure, but its not like PE is entirely evil. Keep in mind there is some selection bias here. You only hear about private equity when its being comic book evil. When things work out or its a non scummy PE company, you never hear about it.

bloppe 10mo ago

If you have a pension, you're an investor in PE. If you live in a country with a sovereign wealth fund, you're a beneficiary of PE. If you're connected to a school with an endowment, a lot of that money ends up in PE funds, and can fund lots of research and student resources. So ya, I'd agree the PE is rarely good for anyone but the investors, but you'd be surprised how many people are investors without realizing it.

AnthonyMouse 10mo ago
If all of those things never invested a cent in private equity funds that buy up existing companies to turn the screws on their customers and put the money into new business creation instead, they wouldn't be making any less money and the whole world would be better off, including the investors themselves in their role as customers and employees.

blitzar 10mo ago

vc, private equity; potayto, potahto

gadders 10mo ago

I can't think of a single example. It normally means making a company worse whilst relying on existing name recognition to drive sales with the aim of re-selling it before people realise how bad the company has begun.

epolanski 10mo ago

Private equity has rarely done good for investors too. With the boom of popularity of ETFs in the last decades it has been increasingly hard for active fund managers to justify their costs by investing on public markets where benchmarks are visible and public. Thus they removed themselves from the benchmark entirely and moved to private equity where there's no benchmark and returns are very hard to gauge. Analysis shows that: - The overwhelming majority of PEs lose money. - Annualized return of PE in UK has been 2.1%, this doesn't even match parking money in short-term bonds. - PE performance is extremely murky, as their gains are virtual and whether you exit profitably is heavily dependent on your timing - The entire sector is ripe with corruption and little regulatory oversight. PEs keep ballooning their holdings valuations by essentially trading companies among themselves. So fund A sells Acme to to fund B at twice the valuation, and will return the favour by buying Foobar at inflated valuation. This all obviously requires access to cheap credit. Many startups are approached by PEs that have already lined up to sell the startup to another PE after few years guaranteeing everybody (from founders to all the PE managers) nice profits, up to the last sucker stuck with the bill. The only ones that have profited out of PE, beyond the managers working there, are those that invested in the PE itself, meaning buying shares of the fund itself.

disgruntledphd2 10mo ago
I mean, their counter-parties know all of this, but the fact that PE assets don't need to be marked to market on a regular basis can be good for a lot of these investors, as it introduces a delay in the spiral that can otherwise occur with public assets. Like, if AI collapses, everyone's gonna sell Treasuries to cover losses as they are super liquid (mostly), but the PE assets can pretend that they're still worth whatever, thus reducing margin calls. PE is generally bad, but their LP's are not entirely stupid and the ability to mark to imagination is worth a bunch of money sometimes.
mbesto 10mo ago
Are you referring to Private Equity (as in MBOs/LBOs) or Venture Capital? None of what you're stating is rooted in reality or data. Source: https://www.bain.com/globalassets/noindex/2025/bain-report_global-private-equity-report-2025.pdf https://www.bain.com/globalassets/noindex/2025/bain-report_g... > - The overwhelming majority of PEs lose money. What? No. Read the report: "Buyout funds continue to outperform public markets in all regions across time horizons longer than five years" > - Annualized return of PE in UK has been 2.1%, this doesn't even match parking money in short-term bonds. Once again, read the report. > The only ones that have profited out of PE, beyond the managers working there, are those that invested in the PE itself, meaning buying shares of the fund itself. I sold my business to PE and I profited nicely. So I'm not sure what you're concluding here... Take the parent's post with a grain of salt.

pembrook 10mo ago

I assume you're asking this rhetorically and just want people to affirm how 'evil' private equity is to support the narrative-driven belief you already have? PE became a favorite journalist boogeyman in the 80s for saddling companies with high interest debt they could never repay or slicing up industrial companies and selling for parts. That's not reality today. A vast majority of private equity buyouts nobody ever hears about or cares about because everything turns out totally fine. A private equity buyout that makes the company worse off, destroys customer trust, kills employee loyalty, and leaves room for competitors to swoop in is a failed private equity buyout. If that were true in the majority of cases the entire PE model wouldn't work at all. Here's just a few success stories of companies you've heard of (there's thousands you haven't heard of, so no point in bringing them up). - Hilton Hotels - Dunkin Brands - Beats by Dre - Dominos Pizza - Petsmart / Chewy Businesses that sell to private equity are often businesses that are not doing well or are not long-term sustainable, hence why the owner wants to sell. Think about it logically. If you're running a fantastic business that is profitable, growing, sustainable, with happy employees -- why would you sell?? Or in the case of public companies being taken private, why would anybody take the risk if everything is going wonderfully?

satvikpendem 10mo ago

Valve is private equity and seems to do a lot of good things, for gamers and for Linux users in general.