Seems strange to me:

1. No one forced these people to sell. Is the idea that you can’t sell to an entity with more money? If you block that good luck with the world economy.

2. If above is ok is the idea that the new owner is inherently worse because they have more money, whereas as the smaller would be OK then where are the new entrants?

3. Going to the article it is clear enough. These industries just are not lucrative to begin with. PE buys them and raises prices, but this only works because people complain instead of starting rival business.

4. Somehow leaving money on the table in the form of a backlog is bad? Why don’t others start a business and take those orders? Why don't they? Not profitable or worth the hassle.

Well there you go.

Separately, American manufacturing just seems very uncompetitive.

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consp 10 hours ago | parent | next [-]

> but this only works because people complain instead of starting rival business.

This reads like fiction. When they corner the market it's of course trivial to just jump in and take that share. No way they will try to be disruptive to you or sue you to hell and back and of course the bank will loan you the pile of money to start a new company since there is no giant corporation to compete with who can squeeze you out in an instance.

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amazingamazing 10 hours ago | parent [-]

Your comment is the one that seems like fiction. You are saying PE is unbeatable? Per the article there is a backlog of orders. What is stopping one of the previous owners from creating another company and taking them?

Sue for what exactly? Of course they will be disruptive, that is what competing means.

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DangitBobby 10 hours ago | parent | next [-]

> What is stopping one of the previous owners from creating another company and taking them?

... they sold the original business to retire??

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amazingamazing 10 hours ago | parent [-]

> ... they sold the original business to retire??

Conjecture unsupported by article

	▲	DangitBobby 10 hours ago \| parent [-]
		Suggesting that the original seller could swoop back into the market is also conjecture unsupported by the article.

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AndrewKemendo 10 hours ago | parent | prev [-]

> What is stopping one of the previous owners from creating another company and taking them?

You will not find any investors.

The investors that want to invest in fire trucks already invested in the PE fund and will give them money over any new start

That’s the point

There’s no money elsewhere.

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amazingamazing 10 hours ago | parent [-]

How did the original businesses start to begin with? Also where is this information coming from? It isn't in the article.

	▲	AndrewKemendo 9 hours ago \| parent [-]
		Usually from a loan or they bought someone out before the PE consolidation in that market really ramped up. This is the insidious part: small markets that grow organically over about 10-20 years are specifically what PE investors look for because they are cash heavy but don’t have desire to expand. So the owner gets 3M cash out for property worth 4M. PE bundles similar businesses (boba tea shops are a popular one) and then uses the net cash to get a loan to expand. They expand, cut corners then cash out on the net profit and then sell the skeleton in the pink sheets or go bankrupt. I’ve had to deal with investors and finance for almost 15 years now. My company was bought by a PE backed company and I knew fund owners this is how the economy works

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hnthrow0287345 10 hours ago | parent | prev | next [-]

PE has a bad reputation, maybe for LBOs, maybe for buying up doctors' offices and retirement homes, and hospitals and making them objectively worse in terms of patient care.

My family doctor underwent that along with several of her local peers and got out from under it and started her own practice. I'm obviously not her only patient, so yes, heightening stress on caregivers by demanding more work to drive profits higher is justifiable of a bad reputation.

Leaving things like medical care, food, water, shelter at the mercy of for-profit dynamics leaves the possibility open that those services stop being provided because it is unprofitable at the expense of the population.

America is deciding it likes profit over its population.

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goda90 10 hours ago | parent | prev | next [-]

People aren't starting competitor businesses because the hassle has become astronomically expensive, also largely due to rent seekers[0]. You need a space, but real estate is absurdly inflated. You need trained employees, but education is absurdly inflated and also poorer quality for the baseline. You need to pay a living wage and give healthcare benefits to attract labor, but cost of living and healthcare are skyrocketing.

Ultimately the influence of rent seekers has grown and the category of people who can take risks by starting a business was the first to collapse, leaving only the wealthy who don't care and the people who can't risk their own survival.

[0]https://en.wikipedia.org/wiki/Rent-seeking

	▲	_DeadFred_ 8 hours ago \| parent [-]
		Then there is regulatory capture in some markets. In this case: You need a street legal product, which takes certification You probably need multiple firefighter associations, which takes not only meeting criteria but politicking with associations (don't know about firefighters but some associations are themselves captured and limit approval to their friends/connections).

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DangitBobby 10 hours ago | parent | prev | next [-]

If you own a business and wish to retire, your options are pretty much to sell, pass it on to someone, or dismantle it. I don't know how this is even a question really. Where in the article or the comment section is anyone saying they shouldn't be selling?

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a4isms 10 hours ago | parent | next [-]

Two connected anecdotes:

1. In the 90s, I had a struggling one-man Mac ISV, and would do gig programming on the side. I did a lot of work for boutique investment banks, and also for a "consulting" firm that did about 75% of their business with the finance industry. The owner of that firm praised me, but didn't like that if my business took off, he'd lose me.

"What would it take to get your commitment to this firm?"

50%

"Where will you get the money to buy half my company?"

A loan from the firm?

When the dust cleared, the business loaned me the money to buy in, and I paid it back with 50% of my profit sharing payouts. This is not some weird financial alchemy, a lot of partnerships are run this way.

———

2. My Duathlon racing buddy was a mold-maker, very specialized and good at his trade. He worked for an elderly entrepreneur who had built his mold business up over decades. Said entrepreneur sent his own kids to university to become "professionals."

What to do about succession when he was ready to retire? My buddy literally photocopied my own arrangement, bought 50% so the business would have a successor it could count on, and bought the remainder when the founder retired. He is now a comfortably wealthy automotive sector entrepreneur.

———

The huge LBOs in the news always seem like space-age deals, but little LBOs for succession purposes are remarkably common.

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amazingamazing 10 hours ago | parent | prev [-]

Your comment is entirely conjecture. Even if we assume it is correct, no young person is creating similar businesses? If so that’s the root cause, not PE, since the alternatives would be all of these businesses shut down anywhere per your reasoning, backlog increase and the remaining businesses increase prices anyway.

	▲	DangitBobby 10 hours ago \| parent [-]
		This is a comment section. Much of it is conjecture. You are making (implicit) conjectures that there are no systemic causes of these sales to PE so you can place blame on the sellers instead of the looters and pillagers themselves.

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jmyeet 8 hours ago | parent | prev [-]

> 1. No one forced these people to sell.

Why do we need antitrust laws? Why do mergers need government approval? Or are you a libertarian who believes in unfettered capitalism?

Where does it end? What if I threatened you with violence to sell your business? Is that OK? You might correctly say "that's illegal". If so, does that stipulate we do need laws? How far can coercion go while still being legal? What if I also own your key suppliers? What if you run a veterinarian practice and I jack up the price of all your meds, radiological film, etc if you don't sell? What if I own the major pet insurance providers and decide that your practice, if you don't sell, is no longer covered by my insurance?

> 2. If above is ok

It's not.

> 3. Going to the article it is clear enough. These industries just are not lucrative to begin with

They're engaged in anticompetitive behavior but on a local level so it tends to escape scrutiny. Unfortunately, if you dog is sick and you like in Cincinatti, you don't really have the option to go Reno where there's (for now at least) a cheaper option.

This is all just rent-seeking behavior. Nothing about this is productive. The people who engage in this should be treated the same way profitters are in wars and natural disasters, which historically hasn't been a fine or legal sanctions. I'll put it that way.

> 4. Somehow leaving money on the table in the form of a backlog is bad?

That's what rent-seeking is. It's unproductive extraction of wealth by removing all other options.

Wait until PE comes for your ISP and suddenly a 1gig fiber connection is $300/month. What are you going to do then? Start your own ISP? Good luck with that.