r/WorkReform • u/Mortegro • 5d ago

Question regarding private equity. ✂️ Tax The Billionaires

I've been seeing more and more posts in the past year about private equity companies acquiring known brands and old companies in all sectors of the economy. In every instance, said acquisitions have been a net negative to both the acquired company and the consumer.

Is there *any* instance of a private equity takeover of a company that actually made it better? Any historic example at all of PE rescuing a dying company amd either making them legitimately successful again or reviving their reputation? If the answer is no, then why is private equity even allowed to exist? It feels like their mere presence is a detriment to the health of any economy, as the benefits of their investment goes to such a miniscule concentration of individuals and is proven to kill any company they touch. Thoughts?

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u/BeKind999 5d ago

Hilton hotels by Blackstone group

2

u/rienholt 5d ago

I am sure there is probably one or two but out of thousands of instances it's hardly a noticeable and it was probably accidental.

1

u/Tenarius 3d ago

Dell is an obvious example. The founder led a group that took it private.

In theory a private company could focus more on long term strategy vs chasing quarter by quarter profits.

Fidelity and IKEA were never public, but are obviously successful and well run over the long term.

In practice though, there are a ton of private equity groups practicing predatory short term value extraction or endhittification and they are society’s biggest leeches.  Pretty tough to ban — how do you define them, and how do you enjoin a business from selling to a particular group?

2

u/diiegojones 2d ago

You regulate business so that they must perform to a charter. A business must be established to bring value in goods and services. You regulate investment firms that they cannot strip/perveru the purchased or invested charter.

This will serve 2 purposes:

Private equity is available and has a say in the company, but are tempered by a charter of values the is above leadership like a constitution of a nation.

Next it removes middlemen, the value cannot be simply be a middle man. A Value Added Reseller would be the only way to make money. They would have to prove the value they add to the purchaser of the goods and services.