Some Private Equity Firms Doomed To Fail as High-Flying Industry Loses Its Way (bloomberg.com) 52
Private equity firms are facing systemic challenges after a half-century of meteoric growth as attractive takeover targets become scarce and financing costs remain elevated while exits prove increasingly difficult. US buyout funds currently hold more than 12,000 companies that would take approximately nine years to fully distribute at current rates, according to PitchBook data.
The industry holds $1.2 trillion in dry powder and nearly a quarter of that capital was pledged at least four years ago. More than 18,000 private capital funds seek $3.3 trillion from increasingly reluctant investors, Bain estimates. Quarterly returns for US private equity funds fell from 13.5% in Q2 2021 to 0.8% in Q4 2024. Apollo President Jim Zelter described the situation as a "natural washout" at an investor conference this month. Charles Wilson of Selby Jennings added that "many PE firms are dead already, they just don't know it" and noted survival depends on how forgiving limited partners -- the entities, including pension funds and endowments, that have invested in private equity firms -- prove when firms return for new fundraising.
The industry holds $1.2 trillion in dry powder and nearly a quarter of that capital was pledged at least four years ago. More than 18,000 private capital funds seek $3.3 trillion from increasingly reluctant investors, Bain estimates. Quarterly returns for US private equity funds fell from 13.5% in Q2 2021 to 0.8% in Q4 2024. Apollo President Jim Zelter described the situation as a "natural washout" at an investor conference this month. Charles Wilson of Selby Jennings added that "many PE firms are dead already, they just don't know it" and noted survival depends on how forgiving limited partners -- the entities, including pension funds and endowments, that have invested in private equity firms -- prove when firms return for new fundraising.
Good fucking riddance (Score:5, Insightful)
It's a bit harder to get others to buy your companies once you've run them into the ground.
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Rats, no mod points, but you are correct.
They've eaten up all the good companies (Score:5, Insightful)
This is incidentally why they opened up private equity to regular investors. Your 401k is about to have hundreds of millions if not billions of dollars poured into it from dodgy private equity stocks.
They're aren't enough public pensions for them to dump bad investments on anymore because again they've killed them all already.
So now they're coming for your 401k. Better start picking out your favorite flavor of cat food. And make sure you have a dry option for backup. But hey you sure showed those bureaucrats what's what right?
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It's a chatbot (Score:2)
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'Not a very sophisticated one'
At least you are honest in this. Or resigned.
It truly would only take an RPI 3 and Ollama to deliver believable posts in your style. Much easier to train an llm on repetitive content. But thanks, you saved me a mod point.
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Which legitimate international trade? (Score:2)
I can't imagine that if somebody actually used Bitcoin for a legitimate international transaction that the hodl crowd would not have made sure every single person on this website heard about it.
Find you I don't think Financial corruption and money laundering is going anywhere anytime soon. People are too fucking stupid to reali
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Bitcoin exists to launder money and bribes (Score:2)
It's not going to burst like a bubble because it's not a bubble it's a tool used to launder money and it's a tool that the ultra wealthy and the ruling elite are beginning to use.
Now if this keeps up our entire civilization will collapse and yeah
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So it's up to you to not choose that investment from the list. I certainly won't.
What goes around.... (Score:3)
"Some Private Equity Firms Doomed "
Good. That's akin to "cockroaches get squished."
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Squiiiiiiiiiiiiiiiiiiiiiiiish
Good (Score:4, Insightful)
Private equity firms are a scourge on society (like Zillow outbidding home buyers just so they can rent it back to them at twice what their mortgage would've been).
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It's the kind of market manipulation that used to be illegal and probably still is if we enforce the laws.
But Americans can't walk and chew gum at the same time. So while we are busy freaking out over whatever moral panic they put in front of us this week, currently trans kids in sports, we can't also demand law enforcement do anything about this cr
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So, the collapse comes sooner? (Score:3)
Given the stories that are finally calling AI a bubble, and one ending, that will probably trigger this collapse.
And you thought 1929 was bad...
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Right on schedule.
https://www.progress.org/artic... [progress.org]
That article is from 2012.
dining (Score:3, Interesting)
Private Equity ruined all chain restaurants. Cuts in pay and everything else, company strapped with debt, menu prices skyrocket, quality declines. I heard on the radio recently that Olive Garden is going to offer smaller portions at reduced prices, because 43% of adults order off the kids menu. Guess who owns Olive Garden and its typical take-over story?
Every single Darden brand has the same run-down, over-priced, and indebted, story. Only the PE dicks make money, everyone else suffers.
Re:dining (Score:4, Insightful)
Anyone can mismanage a company. PE intentionally manages all profits to the top while trying to minimize services. The PE got paid by debt already when the company fails, they don't really care.
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> The equity holders get paid back when the company is sold or IPOs.
Not if the business can earn it out. Its a risk PE is willing to take because they've offloaded liability.
private equity (Score:2)
Re:private equity (Score:4, Insightful)
You're right though that PE firms are leeches. They're firms by rich people for rich people, that milk the shit out of anything they touch. The reason why there's an issue now is clearly stated in the summary (for once!): "attractive takeover targets become scarce and financing costs remain elevated while exits prove increasingly difficult". PE firms do not create anything. They're milking what exists. There aren't enough companies to buy, because the true economy (which is people producing stuff and people buying stuff) isn't actually doing as well as the fortunes of the rich. All those PE firms are fighting for the same targets, making pricing frothy. And guess what, once it's frothy, you still want to make money off of it... who's going to buy it? Other PE firms? IPOs are harder in a bad economy, retail investors or the underwriting banks are more risk-averse.
So yeah, at the end, if you as the PE GP cannot show good results... why would I as an LP commit to more money? Some PEs will die, the successful ones will live. That's no different than any other industry. I just wish the whole PE one would die, rather than milk other companies to death.
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They load the companies up with debt. This converts taxable profits into loan interest payments that are deductible against tax. The loan interest is generally received in a jurisdiction where it isn't taxed. So it is a way of shifting profits offshore.
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Celebrating? (Score:2)
"dry powder" = unallocated capital (Score:3)
https://pitchbook.com/blog/what-is-dry-powder [pitchbook.com]
Gee... (Score:2)
The Vampire is dying. What a shame. /s
Good riddance (Score:2)
You wanted to create "dark markets" to hide your trading and ownership from public view? This is what you deserve. Investors need to be wary of putting their money into markets where the products and pricing can't be examined by many eyes.
survival depends on how forgiving limited partners -- the entities, including pension funds and endowments, that have invested in private equity firms -- prove when firms return for new fundraising.
Blackmail. "Pay us some more or your existing positions evaporate." Also blackmail in that if the situation doesn't change (to bail out PE funds), pension funds and endowments will lose their investments. Public employees pensions, universities, etc. What will happen to a
Awwww (Score:1)
Wont somebody think of the parasitic millionaires?
here that? (Score:2)
Content creators as well (YouTube, etc) (Score:2)
Practically speaking all the large YouTube channels have been taken over by private equity. Some we know about because the channel is honest enough to tell us (e.g., Veritassium, yes, Ve is owned by private equity).
Others you may have seen by the rise in "Why I'm quitting X" (where X is some big channel - think the likes of Donut, Linus Tech Tips, and such) where some big talent on the screen leaves the network or channel. You don't see this so much these days as PE contracts often state the main talent mus
Where's all the sympathy? (Score:2)
Those poor, money-losing PE companies are going bankrupt. Isn't there anyone who sheds a tear for them?
May *all* those PE company owners, end up working for...PE companies. It would be kind of like working for a pay phone company. They can take their medicine and *like* it.
The locusts of the financial field (Score:2)
They invent NOTHING
They build NOTHING
They improve NOTHING
They just loot and pillage and strip companies, damaging suppliers, employees, and customers of already mature businesses somebody else created, then they spit out the husk hoping that some poor chumps with their retirement funds invested in poorly-run 401Ks will buy the wreckage and lose their money.
The people who build and run these outfits are soul-free maggots who pretend they are somehow adding value and efficiency, but the past several decades a