Chose to ignore the shitty nursing homes and the unnecessary root canals, huh?
Private Equity
- Thread starter CFPCPADawg
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I have friends who work in private equity, and I’ve had lots of experience working for PE-backed companies — from what I’ve experienced, they have a negative impact, always prioritizing profits over long-term sustainability and values.
I am sure there are a good bit of straight-shooting PE folks that want to do things sustainably & the right way - maybe even the majority of them. But by and large it seems those at the larger shops are the soulless ghouls that I mentioned earlier, that put the almighty dollar above all else.
It is the household name larger shops I have dealt with. The evil Disney character persona doesn’t fit. Smart normal folks who are smart and hard working. Younger than you think. And understand a balance between returns and doing things the right way. You don’t retain hundreds of billions of AUM by hiring crooks and cutting corners.
You realize why the funds are raised and why capital is deployed into businesses, correct? Again, who do you think the LPs are in the PE funds? The majority are pensions that need ROI to meet their retirees obligations.
You asked for examples and I gave you 3 but all you responded to was about Zaxby’s.
I used to work for a company that was bought by a PE. The company culture deteriorated almost immediately. They got rid of all external benefits, like access to amazing season tickets to Braves/Hawks floor seats/Falcons Box tickets that had been available to employees since the company was founded in the 80's. Next was the company bowling league, then the holiday party, then holiday bonuses. The company was recently sold to a German based competitor.
I have seen PE finance 100% of acquired company. I think there first target is to sell stock. They create a buzz for the company, sell stock, make premium return on that sale and saddle stockholders with a debt burdened vompany
I am sure there are thousands more of bad outcomes. With the trillions invested in private equity, as well as public companies who do M&A. Family offices, etc. I think your opinion of PE as an outlier in terms of being crooked is wildly off. Lots of oversight and interest in doing things ethically. Arguably more than public companies and companies run by founders. PE is simply a source of capital / monetization.
PE does good and bad. Take the predatory actions towards companies like Sears and Kmart, they just pillaged and profited off of hurting companies that could've used the help and stayed afloat. On the other side, you have PE investing in renewable energy companies across the globe, particularly in developing markets where finding capital is very difficult and high energy costs are a huge drain on the economy. The majority of PE is the latter.
That does suck. Don’t think it speaks to the ethical questions many on this board want to pin on PE as a whole.
Can’t blame the owners for monetizing what they built.
Can’t blame the equity fund for making what were probably unpopular, but smart, business decisions.
Can’t blame the PE firm for exiting. Their funds sometimes have finite lives and I’ll admit sometimes that leads to less than ideal outcomes in terms of when to sell.
And sure as hell can’t blame the employees for wishing they still had floor seats. The best part of retaining control of a company is still being able to do fun shit like that.
I definitely don't blame the original owners. They're the ones that took all the upfront risk and deserve to capitalize on that. I had stock options at the time, so I wasn't complaining.
You can blame the PE for the brain drain that ensued after they began making unpopular business decisions. We had multiple recalls, mostly due to their decision to go with a cheaper dye. That eventually led to them paying a substantial sum to bring in some of the original designers as consultants to try and solve the problem. We lost clients and one of our largest international distributors because we couldn't supply product to keep our machines operational.
Unpopular business decisions don't happen in a vacuum. When all you care about is the bottom line, some of the nuances of operating a company are lost in the shuffle.
My company was bought by PE last year. it has been a total clusterfuc&. They apparently didn't do enough due diligence and now there are lawsuits of what the "actual" numbers were, and it appears that they didn't realize what they bought, and now are trying to flip it sooner than they envisioned, thus, making stupid short term decisions to "faux boost" value, making it hard for the true business to do its business, and then when sold, there will once again be a period of trying to pick up the pieces. All while peoples careers are being screwed up. This is my 2nd real big M&A type scenario, I hate PE.
I bet half of the people in this thread that say they "hate PE" have a public or private pension. Do they like getting their monthly check? If they want their pension obligations met, they might want to change their tune on "hating PE". Treasury bills aren't funding pension obligations.....
Sounds like they made some bad decisions too. I think the best PE deals are infusions of capital where existing management retains control or continues to manage the business. In those cases the goal of making money and keeping folks happy jive. A good deal guy on the new money side would recognize that in your case because selfishly it would make him the most money. They aren’t all good.
I work for a capital intensive company with a good balance sheet but changing market conditions put us in a precarious cash position. PE firm saw an opportunity to came in and supply capital to not only stay alive, but grow.
They dont all come in to pilfer and raid. They do come in to make a profit.
They dont all come in to pilfer and raid. They do come in to make a profit.
Same situation with a lot of companies right now. Plenty of value but difficult time to monetize with rates high and current admin totally opposed to M&A. Money is more expensive but likely bridges to a better time to monetize.
We sold to a private equity group and I last 6 months after we sold - complete shit show and they have essentially ran it in the ground
The best is here in FL dealing with homeowners insurance. If you watch or read the news, it's global warming that's driving up the premiums. It's global warming this, global warming that. No ,in reality what is driving up the premium is frivolous roof lawsuits. Your roof can be 10 years past is useful life but all you have to do is file a claim. The claim will be denied because the roof is past it's useful life BUT then the client and roofer lawyer up. Next thing you know, the client has a new roof and the attorney gets cut a check and it never goes to court but it's global warming that's causing the premium increases. That's how the game is being played in FL now.
I know about this situation as well. Roof quote with insurance $50k, cash price $13k. They factor in the lawyer fee when providing the quote. I have watched all of my neighbors go through it and they claim that is what insurance is for. Understand we have had zero hurricane damage. My insurance has double each of the last 2 years and I have never filed a claim.
Did you know that 57% of claims are already being handled with an attorney before they reach adjusters. Lawyers are smart, they’ve been sharing the data for years. Honestly though, climate is also having a significant impact. Hell, half of the Floridians I know didn’t realize they needed additional from FEMA. Insurance is kind of at an inflection point with a lot of macro things like chip shortages and rate taking in different states/leg in Col. But make no mistake; the legal abuse is by far the biggest issue I see in that fairly important industry.
Their shenanigans are being passed to all of us. That’s what folks don’t realize. It’s awful.
Yep. Most PE groups are investors and don't want to run the business anyway. Most provide a cash infusion and want a return. I know there are different models, but most of the PE firms that I have dealt with are only in our business to the extent that they want to make sure that their investment dollars are being used appropriately.
PE is taking over the health insurance industry; it's not good for the policy holders
Very true. That's why the 'average' HO3 in FL right now is $4K. North FL gets cut a break but south FL is taking it on the chin right now. Not uncommon in south FL to be paying $10K for a HO3 and I'm not talking the mansions on the coast.
North Florida is catching up. Built in 09 paid $1100 per year. 2 years ago was up to $1500. This year over $6k. Neighbors see some else do it and think why should I pay out of pocket when insurance will cover it? The worst part, most don’t need a new roof. I was the 3rd house in the neighborhood and most are less than 9 years old. We have not had hurricane damage.
That's because 75% (safe guess here) of homeowners in this state don't have $15-$20K to replace the roof. So they file under their homeowners and here we are. People don't understand if you buy a house, you have to maintain the house. If you can't afford to replace the roof of a home, maybe they shouldn't be homeowners.
I believe UGA proper and not the Athletic Association owns the majority if not all of the athletic facilities as they are projects authorized by the Board of Regents.
I know for a fact UGA proper owns the coliseum.
Agree. They are essentially going to price themselves out because in increased premiums. Will just take a few more years.
All they would have to do is pass legislation that once a roof hits 10 years old, make it actual-cash-value (depreciated) and the premiums would be cut in half, literally. If somebody has a 13 year old roof and files a claim and there is legit damage, the insurance carrier will pay half and the client will pay half. But the attorneys in this state won't let that happen because they're making too much money as-is.
But wait! UGAA is not owned by the university, yes? It isn’t taxpayer funded. I’m assuming the organization could be independent enough to sell itself if it wanted to. Might require some minor legislation but that’s just a minor inconvenience along the way. Some school is gonna jump in eventually cause they can’t compete without the dollars.
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