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. afavour · 1789950647 · focus · HN ↗

      Small(er) businesses can be poorly run. In theory private equity takes knowledge already in practise in other locations and shares it with this new location, improving results. Downside of course is that they care a lot less about that specific location than the previous owners would have.

      One specific practise I’d like to see banned is private equity buying companies with debt the company then assumes. It staggers me that it’s legal.

      1. lazide · 1789951421 · focus · HN ↗

         I’ve literally never seen that happen. what does always happen is cutting ‘non essentials’ that are essential until the company implodes.

         1. afavour · 1789954266 · focus · HN ↗

            I suspect there’s a survival bias at work here. The PE purchased companies that continued to thrive are ones you probably never even knew got bought out.

            1. lazide · 1789955029 · focus · HN ↗

               cites?

               1. alex43578 · 1789957021 · focus · HN ↗

                  Hilton Hotels, Dell, Burger King, Dunkin Donuts? Google works if you use it.

                  1. AngryData · 1789964839 · focus · HN ↗

                     Those are certainly some... examples. Not things I would hold up as a sign that PE is a good thing since all those businesses look like they are perpetually on the edge of collapse around my area. Dilapidated, mostly empty parking lots, poor service from understaffing. I think we would all be better off if those businesses died and left room for others to replace them.

                     1. alex43578 · 1789966072 · focus · HN ↗

                        Who’s preventing a competing coffee shop or burger restaurant from opening? If your area is such a prime business market, but these businesses aren’t capitalizing on it, one of your assumptions may be wrong.

                        1. lazide · 1789981867 · focus · HN ↗

                           It does happen, but often the companies end up poisoning the local markets on their debt binge fueled way down.

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