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. tbrownaw · 1789950347 · focus · HN ↗

      > Can someone steelman private equity, please?

      Step back and look at what it fundamentally is.

      Person A has a business they want to sell.

      Person B has a pile of money and thinks that that business is (or can be) a good investment.

      That's it.

      So, what happens if person A is prohibited from selling their business? Are they forced to keep working because they don't have enough other savings to retire on? Do they shut the business down in order to retire? Something else?

      .

      Calls to ban private equity are attempts to play "shoot the messenger".

      1. sandeepkd · 1789952235 · focus · HN ↗

         May be categorizing the different private equities can be helpful here. A PE interested and invested for growth is always the best outcome. A PE only looking to salvage and squeeze is that gives the bad branding to PE.

         1. works_at_pe · 1789958175 · focus · HN ↗

                > A PE interested and invested for growth is always the best outcome.
            

            (Throwaway) I work at a top ~10 PE.

            This is what we do. One portfolio company has a product on old tech. We bring in a product team, a CTO, internal tech teams. Help shape a roadmap to tackle the most egregious tech and product debt so teams can move faster. Fix non-existent or outdated pricing strategy that has not evolved with the industry. Fix, grow, or evolve GTM to reach new customers. Help bring fresh leadership resources in when needed.

            Industry is typically "boring" and systems are valuable, but aging. We invest, modernize, and try to grow new rev streams, new customers. Portfolio is SaaS focused (can't speak for those that invest in real estate and healthcare).

            The employees of the PE also co-invest so everyone is aligned to help the portfolio companies grow and exit. This is a multiyear process.

            1. sandeepkd · 1789964858 · focus · HN ↗

               Naming couple companies that you acquired for whom you changed the trajectory would be a lot stronger signal without revealing your identity.

               On side note, its rare to see anyone fixing the old tech, its hard to fix, needs a different kind of talent thats hard to hire for the PE money. The folks who can understand some one else's decade old code and run their imagination through all the possible assumptions or trade off that might have been made in code/system are rare to find.

               Finding new customers, finding more things to sell, finding synergies with other items in your portfolio, increasing the price for existing products are more realistic.

               1. works_at_pe · 1789983551 · focus · HN ↗

                  We have portfolio level CTOs that specialize in this playbook. Fixing the tech means many things. Many companies don't even have CI (forget CD). Some have really broken processes and handoffs between teams. And yes, some are running COBOL backends.

                  Sorry, naming a portfolio company would reveal the PE.

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