Comment by s1artibartfast
2 years ago
Because, contrary to public belief, PE firms are skilled and sophisticated managers.
Most deals are successful under their management, and this is why banks usually lend 70-90% of the purchase funds.
They specifically target companies that are undervalued, in distress, and can be turned around or liquidated for more than the cost.
PE isn't an exotic business philosophy. It is literally just a private buyer.
> PE isn't an exotic business philosophy. It is literally just a private buyer.
With a complex tax-favorable structure, https://www.ropesgray.com/en/insights/alerts/2019/02/tax-iss...
Great read! The 6 layers of corporations with different functions was fascinating.
Potential analogy to incentives which motivate chains of software exploits.
"Most deals are successful under their management"
Although often to the detriment of customers as I have seen with several vets and my former dentist. Prices suddenly doubled and tripled or even more.
I'm not sure those vet deals are profitable yet. A lot of the deals in the last 10 years will be looking for their exit soon and I'm not sure there are buyers.
Interesting. I always wonder why vets don't just jump ship and start their own clinics.
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