> PE model is very different from regular private companies, and it often involves extracting maximum profits at the expense of the company itself.

Not all PEs model. The ones you are referring to are often buying large businesses (like the infamous Toys R Us) load them with debt and strip their assets. 90% of the other PEs out there do not do this...in fact the opposite. They put capital on their balance sheet to grow.

But doesn't extracting maximum profits at the expense of the company itself mean front loading profits - i.e. long-term worse outcomes?

How does a PE company make money from that - unless who they sell it to is not saavu enough to realize it?

What is the "company itself" if not its owners (private equity company that is)? Everything else is just an asset of it. If they see a way to maximise profit by draining the company that's better than any other one, why not? After all if company is then simply liquidated, it frees up market opportunity for new entrants.

> Because a PE fund is at most a seven year timeline

Berkshire Hathaway is a PE fund with permanent capital.

Broadly speaking, making generalisatios about PE is almost impossible because it's an asset class which is, essentially, all non-public business. Instead, it's more useful to think about which element private equity touches you're specifically complaining about: capitalism in general, financial transparency, leverage and liability.

> There is a legal requirement for directors of public companies to act in the financial interests of all shareholders

No, there isn't.

The whole point of Revlon duties is that they trigger "in certain limited circumstances indicating that the 'sale' or 'break-up' of the company is inevitable" [1]. Outside those conditions, "the singular responsibility of the board" is not "to maximize immediate stockholder value by securing the highest price available."

> There is no such requirement for a private company

Are you thinking of minority rights? These vary based on whether a company is closely held or not [2], not whether it's public or private.

[1] https://en.wikipedia.org/wiki/Revlon%2C_Inc._v._MacAndrews_%....

[2] https://millerlawpc.com/rights-minority-shareholders-private...

>There is a legal requirement for directors of public companies to act in the financial interests of all shareholders. In practice, and according to precedent, this means long term viability of the company, in other words, a sustained profitable business.

All that means is that controlling shareholders can't use the company as a piggy bank and raid it to fund their other ventures. It doesn't mean the business has to be "sustainable" or whatever. In fact, it's perfectly legal for the board to sell to a "vulture" PE firm that will sell the business off for parts, as long as the sale price is good enough.

Public companies are interested in quarterly profits. But for the most part still have longer term goals and don’t purposefully make decisions that will make the company worse off in the long term.

Apple is not going to sell off all of its real estate into separate company, force the other half to rent it and then sell off the rental holdings. Even when it was almost bankrupt it didn’t “shut down the company and give the money back to shareholders”.

The former is a standard PE play. I’ve been part of the “roll up small companies and enshittify them and go public” playbook. I was the lead architect at the parent company designing the software system that integrated the disparate systems of the target companies.

Funny enough I worked for a startup that I loved in 2018-2020 and only left because a job at BigTech fell into my lap. After leaving BigTech in 2023, the company that acquired the startup I worked for (a PE backed acquire and enshittify company) offered me a job as the architect to consolidate their systems based on a referral. I booed out after having a lot of discussions with their internal management and one with a representative from their investor.

It’s hell being under the thumb of a PE companies management (not the internal management) they second guess everything and the level they were hiring me for, I would have dealt with the PE investors representatives directly

> I see these private equity takes on HN frequently and am really baffled by the ignorance.

Probably a good time to note that you’re posting this comment on a website created by a private equity firm for promotional purposes.

> If a company controlled by PE goes bankrupt, shareholders (PE) likely make a profit. But if a publicly listed company goes bankrupt, shareholders lose their money

This isn't remotely true. Plenty of private equity investments go bust before they can pay themselves back. And plenty of public company investors milked a company for interest payments or dividends into the ground.

> PEs almost never lose money

Private equity funds regularly lose money. Usually to lenders.

You're complaining about leverage in general. Probably not private equity per se.

>* If a company controlled by PE goes bankrupt, shareholders (PE) likely make a profit

That's not necessarily a bad thing, or sign of anything sinister. If a business is failing, and you buy it for pennies on the dollar, and despite your best efforts it still goes under, so you liquidate it, you can still turn a profit if the price you paid is lower than what you got from liquidating it. That's not bad, because private equity (or anyone else, for that matter) isn't expected to operate as a charity. The only reason they're willing to stump up the cash to buy the business in the first place is the expectation that they'll make money. It's also not bad for the original owners either, because the fact that they hold to PE rather than someone else, or liquidating it, suggests that the PE offered a better deal than either.

>But if a publicly listed company goes bankrupt, shareholders lose their money

Often times yes, but sometimes not, eg. hertz.

>Private equity firms have much more devious ways of looting the companies, like management fees, acquiring other portfolio companies, and various other tricks.

"looting the companies" is non-nonsensical when they also own it. It's like saying a scrap yard is "looting" the cars it bought by taking out the valuable parts to resell or whatever. The rest of the stuff might make sense in the context of the LPs getting screwed over, but not in the context of portfolio companies that they own.

>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.