[chongli]

From what I've seen, they take a terrible business and liquify its valuable assets for their investors, freeing up capital to be invested more productively elsewhere in the economy. Of course those investors could take the money and commission a bunch of statues of themselves, but frequently they do something more productive than that.

A lot of the negative reaction to them seems to me to be mostly emotional. They'll dismantle a business that holds a lot of nostalgic value for people, even though it's long since ceased to be a viable and productive company. But it wasn't their fault that the business was in that situation in the first place! Years of mismanagement and neglect or perhaps disruption from a competitor left the business in zombie-like state. PE came along and put it out of its misery rather than allow it to slowly crumble while depreciating the value of its illiquid assets.

[darth_avocado]

> lot of the negative reaction to them seems to me to be mostly emotional

Mine specifically stems from PE buying up all but one 24x7 emergency vets in a 20 miles radius from me. All of them were thriving businesses. There is only one remaining non PE ones has its days numbered. After monopolizing the emergency vet market, they shut down a few locations, which previously acted as competition for each other, effectively cementing monopolies in those individual neighborhoods as well. Now, you pay $200 to just get your pet checked out and always have to wait anywhere between 6-8 hours in triage if your pet isn’t literally dying, because they are perpetually understaffed and there are no other options. They also recommend unnecessary tests and treatments, present them as “optional” but refuse to treat your pet if you don’t agree to their “optional” treatment plan.

[chongli]

Lots of businesses have big positive externalities [1]. They provide more benefit to their communities than they take in for themselves. Unfortunately, these sorts of businesses are easy pickings for PE.

Artists are a classic example. They generate huge positive externalities for a community while reaping almost none of the benefits for themselves. Artists get severely exploited by the economy for this!

To counteract this problem we need other ways of addressing the positive externalities. In the case of artists, this usually comes in the form of public (and private) patronage and endowments for the arts.

[1] https://en.wikipedia.org/wiki/Externality#Positive

[youarentrightjr]

Man, it's horrible people have such an emotional connection to art and businesses that keep their pets alive. If only we could transform these into an asset that extracted wealth, now that would be great for society! Think of all the externalities!

[s1artibartfast]

Sounds like a problem with lack of competition. Would you have been happier if it was a publicly traded company that did it? Amazon health or some such?

[degamad]

What you are describing the best-case scenario. They happen.

What also happens is, they take operating businesses with reasonable returns, buy up all it's supply chain or it's competitors to reduce costs or enable monopoly pricing, then load the company up with debt, squeezing it into a terrible company. That is the bad scenario which people object to.

An example: https://pluralistic.net/2024/02/28/5000-bats/#charnel-house

[andrew_lettuce]

They could do this, but there's not enough targets of this type for the money invested in the sector. They've also proven to not have the advertised & applicable expertise to run companies any more efficiently than current management. Nostalgia had nothing to do with it unless that's one of the company's assets. I've been inside on three PE acquisitions, and 5 sales by PE to new funds. The playbook was the same for them all: predictable, decent cash flow, cut expenses, grow enterprise sales, sell on before long term cracks from lack of strategic investment showed. If anything they accelerated the decline of healthy going concerns, but at each sale the insiders did great.