[airstrike]

The fact that there are poor performing PE funds out there doesn't make LBOs an objectively evil device.

You're simply arguing investors are dumb for throwing their money at PEs somewhat indiscriminately rather than only investing in high-quality PE funds with investments that do not go bankrupt as often.

Moreover, one could argue that the mere existence of LBOs forces managers to be more disciplined and act on behalf of their shareholders, which marginally reduces the challenge that agency costs pose on public corporations

[notfromhere]

The LBO model inherently makes operational flexibility difficult.

The whole idea that shareholders are the only ones that matter is both recent and poisonous to the long-term health of the economy.

[airstrike]

> The whole idea that shareholders are the only ones that matter is both recent and poisonous to the long-term health of the economy.

They are not the only ones who matter, just the ones who matter the most. My point was more about corporate kleptocracy and whimsical managers running wild. I did not claim shareholder value trumps everything else.

In fact, the agency costs of appointing managers to run a business affects not only shareholders but every other stakeholder.

But for the record, Unocal v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985) established that takeover offers ought to be evaluated in the context of all stakeholders – "shareholders, creditors, customers, employees, and the community"¹ – with Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986)² later modifying this test to put shareholder value above all other stakeholders in certain circumstances ("Revlon duties").

Whether that is "poisonous to the long-term health of the economy" is most certainly not a foregone conclusion and a bold claim to make, particularly given that we're currently in the longest period of prosperity³ and LBOs are everywhere to be found

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1. https://en.wikipedia.org/wiki/Unocal_Corp._v._Mesa_Petroleum...

2. https://en.wikipedia.org/wiki/Revlon,_Inc._v._MacAndrews_%26....

3. https://www.cnbc.com/2019/07/02/this-is-now-the-longest-us-e...