Thread

1. NegativeK · 1789944184 · focus · HN ↗

   Can someone steelman private equity, please? I'm honestly looking for the upsides (for non-investors) of when PE moves into an industry like medicine and begins buying up businesses that traditionally aren't already large chains.

   I already hear the downsides frequently from someone whose work is directly affected.

   1. balderdash · 1789953507 · focus · HN ↗

      While not perhaps the best argument is the private equity provides liquidity for founders that want to exit. If you started business X, you’ve grown it for 20-40 years and you want to retire, selling is typically the answer. Let’s say the business makes $1m/yr after tax cash flow, PE might buy for $10m, besides PE there aren’t a bunch of likely buyers for your business (of course maybe there is a big competitor, and maybe you could sell it to an employee (but they probably don’t have the money and would need you to seller finance etc)). So for entrepreneurs with a successful small business (say $2-5m+ of ebitda) selling to private equity is the clearest path to a liquidity event for them.

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