I understand where you're coming from, but you'll be signing a different tune when your employer and/or client terminates you. While we may all hate P/E for fairly valid reasons, they also buy companies injecting capital back to founders and VCs, and either merge companies or tear them apart (not great) and take them IPO or sell them to larger firms. We hate them for when this goes south and people lose their jobs or what have you, but this turnaround of capital creates the next round of capital that supp

> Don't 99.5% of businesses fail within 10 years?

Private equity invests in the already profitable / nearly profitable companies that can be worth a lot more if they scale. Think of things like Liquid Death (the water company) that is currently raising PE money to get into every grocery store. Their business is profitable so a lot of the risk is gone; at this stage, the failure rate is really low, because most of the work is done. [1]https://dtcnews.substack.com/p... [substack.com]

The problem is that more companies are staying away from PE money because their incentives are

[1] https://dtcnews.substack.com/p/liquid-death-looks-to-raise-20m-to

From watching various Youtube finance guys, the main point appears to be you take out a loan on the good business you just bought (with other peoples money), and put that money somewhere governments cannot tax it (Israel, South Dakota, etc) and it does not matters if you kill the original business.

> I read this as 'Zombie Films' and was extremely confused for a little bit.

The next installment of the night of the living dead will have bankers in brooks brothers suits slowly walking around trying to find investors who want to drain companies of value....

Pretty much ever PE firm's MO is to saddle the acquired company with as much debt as possible, extract as much cash as possible then walk away from the dumpster fire. Wash Rinse Repeat with the next company.

This includes things like auto repair shops, dentists, veterinarians, home improvement contractors.

PE has been seeping into these businesses by buying out the owners.

A good way to tell if a company is PE-owned if they won't tell you is to look at their consumer contract.

Firms owned by PE extract as much from the customer as they legally can and leave no value on the table. Their contracts are full of binding arbitration, evergreening (automatic renewal) clauses, and short warranty periods.

The materials used by PE-owned businesses are sub-par as they cut their material costs to the bone. This explains the short warranty periods.

Exactly what happened to my 2nd IT job. Clipboard-bearing suits came and were shown everything. 2 months later I left. 2 months after that the announcement came that the company had been sold off to a PE firm.

That PE took a 50-year old, money-making medical firm (billing, staffing, etc) and promptly ran it into an iceberg. After the carnage, it was sold yet again.. and one more time.

Now they exist in name only, a sub of a sub of a sub of some other company.

Getting bought out is almost universally undesi

You may have to change jobs to get rid of those awful funds. The whole 401K thing is a closed garden racket.

Ever wonder why you can't invest in an IRA when your employer offers a 401K?

Ever wonder why the annual contribution limits for IRA's are much lower than 401K's?

Ever wonder why the owner of a small business can invest more in a "Sole Proprietor" IRA or SEP then an employee can if they work for a company who doesn't offer a 401K?

These rules are there because special interests were able to lobby for them

Time to find a new plumber.

Once PE buys a home improvement contractor, they change the terms in the contract to extract all the value for themselves and leave nothing on the table for the consumer.

Read the contract before committing to any new business. The contract will almost tell you that a business is PE owned. It will have shitty terms for you and indemnify them.

The usual term with things like plumbers is "rollup". Even the most delusional excel jockey probably doesn't believe he has 'operational alpha' vs. a veteran plumber in matters of plumbing; but he(correctly) knows that local plumbing outfits are a fairly heavily fragmented industry with a lot of relatively small players; the sort of quaint folksy thing that looks like one of those competitive free markets they told you about in EC101. And, if you, purely hypothetically, can borrow money for a pittance, you don't need to improve operations when you can just buy a bunch of the small players, consolidate them, and then raise prices to match the newly reduced level of competition.

Same deal works with more or less any business with a lot of mom 'n pop operators; as well as things like rental housing. Maybe there are some marginal efficiency improvements in back office functions because it's not eleventy zillion individual copies of quickbooks; but most of the actual margins come from the higher prices you can command from customers and the lower prices you can offer to suppliers and employees once you consolidate a given sector in a given area. The effect is particularly lurid when it comes to thinks like small medical and dental practices; or care homes; since there it's about the money; but being about the money is also about pushing your employees to recommend unnecessary implant surgery and cutting patient/staff ratios as hard as you can without anyone noticing too many bedsores. Fantastic stuff, really.

> Seems like there is too much money out there.

Agreed. Seeing the eye-watering returns that some of the big, blue chip players made, you've got a lot of people chasing after them. Problem is, the blue chip guys are able to get the best deals, and these smaller ones are having to rely upon riskier opportunities. No surprise them that they thus have more difficulty meeting their returns. I shed no tears - risk is an inherent part of capitalism. They made a risky bet with this midsized firms, so if, surprise, they don't make their money, then it's on them.