| ▲ | Aunche 2 days ago |
| Usually when a company sells to private equity, it is because the business is suffering from financial hardship or the current owner is unable to continue to run the business and cannot find a successor, so selling to private equity would be the least bad option. |
|
| ▲ | vjvjvjvjghv 2 days ago | parent | next [-] |
| That is often not true. My former dentist had a nice family practice that made very good money. Then a PE company came in and offered a ton of money which was an offer he couldn’t resist. The PE slowly took over more and more small practices in the area until they had a significant market share which allowed them to raise prices and reduce service. Patients didn’t really have anywhere else to go. I see the same happening with vet practices. The big corps are buying more and more small practices so you basically have almost no other choice than paying higher prices. |
| |
| ▲ | Aunche 2 days ago | parent [-] | | > Then a PE company came in and offered a ton of money which was an offer he couldn’t resist. He is going to retire sooner or later and what then? There is a cultural paradox where it's socially unacceptable to profit too much from a necessary good or service, but you can profit as much as you want from non-necessary goods and services. In the past, this pressured small practices to keep their service standards high and prices relatively low. However, due to the accessibility of information and finance, rather than start your own medical practice, you can become similarly wealthy with half the work just by being employed as a doctor/dentist and investing your money in an ETF. Of course, people with money swoop in to "correct" the mismatch in supply and demand, which leads to worse service and higher prices. The knee jerk reaction people have towards these situations is to "punish greed", but that doesn't change the underlying market forces. Much like rent control, it may work in the short term but makes the problem worse in the long term. | | |
| ▲ | magicalist a day ago | parent | next [-] | | You claimed: > Usually when a company sells to private equity, it is because the business is suffering from financial hardship or the current owner is unable to continue to run the business and cannot find a successor, so selling to private equity would be the least bad option. private equity being able to offer more money for your practice when you retire than a dentist who would have continued the small practice is not financial hardship or being unable to find a successor, so please don't pretend your two comments are equivalent. This comment is much more honest: there was room for financialization, so people did it. They were unable to find a successor who would pay more than a group of people that wanted to wring money out of their company. Gives the lie to the "selling to private equity would be the least bad option" conclusion, though. | | |
| ▲ | Aunche a day ago | parent [-] | | Sure you could voluntarily sell your business at less than its market worth to help a younger dentist, but someone else with the same net worth could donate the same amount of money to help the young dentist as well. Why is the expectation of social good placed entirely on you? |
| |
| ▲ | vjvjvjvjghv a day ago | parent | prev | next [-] | | You wrote "it is because the business is suffering from financial hardship or the current owner is unable to continue to run the business and cannot find a successor, so selling to private equity would be the least bad option." It should be "PE offered by far the most money and will make up for it by raising prices and reducing service" That's exactly what happened with that dentist practice. For years I went there, got a cleaning and was told "keep doing what you are doing". After the takeover they found some problem with almost every visit and fixing it coincidentally would have cost exactly the $1500 my insurance was covering each year. | |
| ▲ | thfuran 2 days ago | parent | prev [-] | | An act being incentivized doesn't make it good, only more likely to occur. Both the act and the incentives can be opposed. |
|
|
|
| ▲ | thfuran 2 days ago | parent | prev | next [-] |
| I'm not sure that simply stopping business is categorically worse than selling to a malevolent entity instead. |
| |
| ▲ | crazygringo 2 days ago | parent [-] | | Closing down the only nearby hospital is generally considered worse. This is about providing life-saving care, not Toys R Us. | | |
| ▲ | thfuran 2 days ago | parent [-] | | As a first order approximation, closing down a nearby hospital and sending patients to one further away is only worse than PE if PE doesn't worsen care to such an extent that more people die there than would've en route to the other one. And most companies aren't about lifegiving care anyways. | | |
| ▲ | welcome_dragon 2 days ago | parent | next [-] | | The commenter spoke specifically about the lone hospital in an area. e.g. rural areas Hospitals in those areas tend to not offer as high quality of care as most urban/suburban hospital. When the only hospital in an area closes, it's not just a matter of going slightly farther out for care. In many cases, it's just not possible for people. This is a big issue with the idea of socialized health care as it could happen in America. Right now we already have a two (or three) tiered healthcare system: one for the "rich" meaning urban and suburban and one for the "poor, remote, and/or rural". When people talk about socialized health care they rarely if ever talk about how to keep such a system from getting worse. So when a rural hospital closes down, you can expect a higher death rate in the local population. Not to mention the economic impact of losing what is probably the highest paying employer around and all the fallout that comes from that. | |
| ▲ | crazygringo 2 days ago | parent | prev [-] | | Well yes, that's the whole point of ambulances and such. More people will die because minutes matter. And this whole topic is specifically about companies in the business of livegiving care. Hospital ER's. |
|
|
|
|
| ▲ | kjkjadksj 2 days ago | parent | prev | next [-] |
| Or they merely want no job and a huge pile of money. That is super common too. |
|
| ▲ | 2 days ago | parent | prev | next [-] |
| [deleted] |
|
| ▲ | mbesto 2 days ago | parent | prev [-] |
| This is so untrue I don't even know where to start... Source - have sold my business to PE and have advised on 900+ companies who have sold to PE firms. |
| |
| ▲ | Aunche 2 days ago | parent | next [-] | | In common parlance, "private equity acquisitions" refer to B2C companies rather than B2B companies where there was never of stigma of financialization to begin with. It's possible you're right as I'm also speaking based off vibes, but my argument remains the same. Those who sell out for a quick payout would eventually fall into the category of "the current owner is unable to continue to run the business and cannot find a successor" when they hit retirement age and their kids would prefer easier/safer/higher general market returns. | | |
| ▲ | mbesto a day ago | parent [-] | | I'm not at the retirement age and I was able to continue to run the business, yet sold to PE. How do you explain this? Also, see my comment below. Feel free to list out all of the companies from those portfolios that match your criteria. I'll wait patiently. | | |
| ▲ | Aunche a day ago | parent [-] | | Like I said, I wasn't talking about random B2B startups, and you're going to hit retire age someday. I don't understand what you're arguing against. If we lived in a place that is hostile to "private equity", the majority of the companies you listed never would have been started in the first place. | | |
| ▲ | mbesto 18 hours ago | parent [-] | | > you're going to hit retire age someday. I mean so is every owner, whats your point? This is such a weird argument... |
|
|
| |
| ▲ | ascendantlogic 2 days ago | parent | prev [-] | | > I don't even know where to start... Literally anywhere is better than just hand waving the parent statement away with nebulous, unverifiable claims of your own experience. | | |
|
