[andrei_says_]

If you are a good analyst with a bonus tied to quarterly profits increase, can you be still a good analyst?

Do you sacrifice your own monetary benefit to save a company? But then what about your family?

I don’t think analysts are not smart enough or not caring enough. But institutionalized greed corrupts the integrity of everyone.

[jscode]

Incentives matter and PEGs want companies to grow significantly over the life of their investment. The biggest reward comes from the future sale after you’ve increased the enterprise value 10x. I’m sure that people have made poor decisions for short-term gains, but the real issue is giving immense power to someone who has never actually had to build teams, ship products, or go the extra mile to make customers happy. Being “smart” doesn’t mean you always make good decisions. Some of the most successful entrepreneurs I know aren’t particularly book smart. In fact, much of their success could be attributed to the fact that they just didn’t quit when any other reasonable/normal person would have thrown in the towel.

[erosenbe0]

Ehh some PEGs do not care about long-term. Often they want to do anything that can get them some lump sum dividends and bonus payouts. Cost cutting combined with a recapitalization cookbook, selling assets like real-estate, and then using the proceeds and borrowed cash for themselves. Terminal price won't matter much due to either the initial windfall or because someone else will be holding enough of the bag after recap.