2. Buy some company that is somehow deemed "cheap";
3. Cut costs and raise prices;
4. Load up the company with arcane debt that will blow up some time after the PE investors have cashed out; and
5. Based on the surface-level financials from (3), re-list the company to exit before it blows up.
I'm not worried about PE because this isn't sustainable, for two reasons: if debt isn't cheap, it doesn't work and the debt burden only works so long as the SEC doesn't take a hard look at it.
Remember the investors have to be able to cash out and pay back those loans. If no one buys the junk they create then this business model falls apart.
I'm more concerned with the short to medium term effects of this such as the extortion of housing of our poorest and most vulnerable [1] (which people should absolutely go to prison for), buying up all your local vet clinics [2] and buying up medical practices [3], to name a few.
All of this is just rent-seeking. This is what capitalism is. This is what capitalism does. It's the only thing capitalism does: intermedidation and rent-seeking.
1. Borrow a lot of money;
2. Buy some company that is somehow deemed "cheap";
3. Cut costs and raise prices;
4. Load up the company with arcane debt that will blow up some time after the PE investors have cashed out; and
5. Based on the surface-level financials from (3), re-list the company to exit before it blows up.
I'm not worried about PE because this isn't sustainable, for two reasons: if debt isn't cheap, it doesn't work and the debt burden only works so long as the SEC doesn't take a hard look at it.
Remember the investors have to be able to cash out and pay back those loans. If no one buys the junk they create then this business model falls apart.
I'm more concerned with the short to medium term effects of this such as the extortion of housing of our poorest and most vulnerable [1] (which people should absolutely go to prison for), buying up all your local vet clinics [2] and buying up medical practices [3], to name a few.
All of this is just rent-seeking. This is what capitalism is. This is what capitalism does. It's the only thing capitalism does: intermedidation and rent-seeking.
[1]: https://www.newyorker.com/magazine/2021/03/15/what-happens-w...
[2]: https://www.thenation.com/article/economy/private-equity-pet...
[3]: https://www.nytimes.com/2023/07/10/upshot/private-equity-doc...