Inside the Private Equity Scam—and the Livelihoods It Has Destroyed
Financiers have bamboozled the public for years about their expertise in “fixing” companies. Yet they often—and sometimes deliberately—run them into the ground.
https://newrepublic.com/article/198351/private-equity-scam-destroys-livelihoods
Comments
The following is a copy of the original post to record the post as it was originally written.
Inside the Private Equity Scam—and the Livelihoods It Has Destroyed
Financiers have bamboozled the public for years about their expertise in “fixing” companies. Yet they often—and sometimes deliberately—run them into the ground.
https://newrepublic.com/article/198351/private-equity-scam-destroys-livelihoods
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.
Run them into the ground as a business model.
Either load it up with debt you never pay back
Strip it to bare bones so you can sell or take it public. Usually do that with aggressive growth/sales and profitability is the next guys problem.
Sell off the IP and assets….strip mine it
>Does private equity takeover of businesses improve them or run them into the ground?
If anyone is interested in a nuanced, practical discussion of this topic, such a discussion happened on Twitter a few days ago.
It’s not an either/or… both can happen.
But common sense tells you that if private equity firms routinely borrowed money to buy companies so that they can thrn declare bankruptcy and not pay back the loans-as some on the left seem to think they do-then banks would just stop loaning them money.
Sometimes they buy a company that is bankrupt just to squeeze a little more value out of it before the very end.
Sometimes private equity investors buy all or part fo a company that was just started–which is what Elon Musk did h Tesla almost two decades ago. Venture capitalisk is just a form of private equity.
Aside from the question of whether it’s technically “good” or “bad,” doesn’t it just kind of suck that this is how we’ve designed the world to work?