I have a question someone can hopefully help me answer. I've heard this narrative for many years now - private equity buys a company and drives it to shit. Recently it was PE firms buying all the vets in an area. If that's indeed the case, wouldn't it make sense to hold out because eventually you'll get all the customers? Like, if there are 10 vet offices in the county, and PE firms buy 8 of them, over time won't everyone end up flocking to the 2 that held out?
The eight (owned by some group that owns 800) can undercut the two on price until they go out of business. The eight could refuse to deal with suppliers that deal with the two. The eight can exclusively license products and procedures within the area, which the two would not be allowed to sell. The eight could pour a lot of money into local advertising, and start rumors about the other two to be picked up in the papers. The eight could award itself certifications and awards that are denied to the two, because the 800 represent a lot of pressure in the industry.
Or they could play dirty tricks. I think the previous is what they would be expected to do, and if you were an investor you might be able to sue them if they didn't.
In my experience in my city [Portland, OR, US], PE owns most of the large clinics (NW VCA, BluePearl, Banfield). There are still a lot of smaller vets, but it's harder to get an appointment with them and most don't do urgent care/24hr emergency or have an app where you can do scheduling.
- In an emergency/urgent care situation, you can't really do a price comparison/shop
- The pricing is opaque until they you receive the service. Even in routine/non-emergency situations, you get a quote for the services often 20-30 minutes into your appointment, even for annual exams, so it's pretty obnoxious to switch services at that point.
- FWIU, Banfield and BluePearl both have a strategy where have lower cost exams to get patients in the door, but then make that up in super high testing/drug fees, e.g. a $300 UTI test that labs charge $30-100 and 10x upcharges on antibiotics readily available from Chewy/neighborhood pharmacies.
It's an information asymmetry problem. If people knew which business were PE owned they would avoid them. This problem often happens when the cost of services is charged after delivery.
"private equity buys a company and drives it to shit."
Allow me to introduce you to VMware. It was bought out by Broadcom. That sounds like a tech firm buying a tech firm. It isn't really.
Broadcom is (not really) run by Robert Redford from the film "Pretty Woman", except this asset stripping exercise is rather more unpleasant than even his efforts.
VMware used to have a flourishing eco system. It managed to largely throw off plagiarism threats from when it was ESX vs ESXi. It was basically Linux (Redhat) with knobs on and fuck you freetards but here's a freebie version that we have cobbled together.
Anyway.
I was a VMware fanboi for roughly 25 years and now I am not. I was also a Windows (MS) fanboi too for some decades. Can't be arsed these days but I will.
Dealing with Windows and VMware is really unpleasant these days.
Theoretically, if those two firms are good at their jobs & also good at marketing (including referrals), then yes sure.
Realistically, 75% of professionals aren't worth their salt & so many people will just continue going to the PE firm controlled places since switching won't get them any better service & the 2 hold out firms in this scenario would pragmatically raise their prices.
> since switching won't get them any better service
It will, but as you note it will cost more.
As someone who has extensive experience with many vets due to rescuing and fostering with multiple orgs and having animals of my own, I'll take the local firms any day of the week. Although there are some bad ones, and although it can be hard to get your foot in the door, local vets as a whole offer better availability, a more timely experience, a lack of upselling, someone at the front desk, and generally more competent vets.
Experiences I've had with the other places make it very clear they're paying their vets bottom dollar, want to extract every one of my dollars possible, don't care how much of my time they waste doing it. Strangely, although they always want me to review my experiences, they never seem to take the criticism to heart.
The market can stay irrational longer than you can remain solvent. Yes eventually customers will go to better firms who will beat out the short sighted competition, but that could take years and there's no guarantee your firm will survive to see that day. A risk free lump of cash in hand right now is tough to pass up. Even if you are personally willing to take the risk, other stakeholders like stockowners, partners, or key employees may not. Indeed seizing the disgruntled customers after they become fed up doesn't actually require you to remain in business during the dark times - you could start a new firm with a clean slate, optimized for the situation that exists then with a war chest filled by the very PE firms that demonstrated to your customers how valuable you really are.
I doubt a PE buyout would allow the principal to compete within an X mile radius for Y years post-sale. (PE firms may be a lot of things, but utter idiots is not one of them.)
Yes... that's one way of putting it, but I liked the sibling comments more. Another perspective on the same thing. The upshot of holding out isn't very great and may in fact get worse if MegaPetCo buys all your suppliers.
It can be not so much greed as running for higher ground when the MegaPetCo tsunami comes to town.
Is the recent trend of private equity buying literally every business going - down to your local plumber - a sign of wealth inequality? Or would it have happened regardless?
I wish I could remember where I heard this, it's from some NPR podcast like Freakonimics or This American Life. Dentists would normally sell their private practice to an up-and-coming dentist that they know, but recent graduates are so mired in debt that they can't really afford the loan to buy a practice, so PE firms end up buying instead.
Edit:
> DUBNER: We did a series on private-equity consolidation in the pet-care industry, and we found a lot of problems there for employees and consumers. But we also learned something that seems to apply to a lot of the human healthcare industry. If you look at nursing homes, doctor’s offices, dentists offices, what we heard is that the founders of these offices and companies, when it’s time to retire, they might prefer to sell to one of their junior partners. That’s what often happened before private equity was around. But now those junior partners have so much debt from medical school or veterinary school or whatever that they can’t afford to buy the practice. So the only likely buyer is an outside investor like a private-equity firm. The P.E. firm is satisfying a real need there, but the resulting roll-ups or consolidations are often worse for existing employees and worse for consumers. Do you have any thoughts for how that might work differently?
Yes, it's definitely a sign of increasing inequality, on at least three fronts.
On the high side, there's loads of money sloshing around with—especially since the end of ZIRP—no "safe" place to put it. They "need" ways to guarantee high returns over relatively short periods in order to justify their continued access to a never-ending supply of yachts that have other yachts docked inside them; vulture capitalism is a reliable way to do that for people with absolutely no scruples or understanding of (or care about) long-term effects.
On the low side, much like DangitBobby noted, there's much less money available to either buy the business of someone interested in retiring and passing it along, or to start your own.
The third side is that moneyed interests have captured government to an unprecedented degree—even before the current administration came in, with its "burn down everything that helps people and hand the ashes to the wealthy to sift through for loose change" policies. All the protections that should be stopping private equity from doing these things are reliant on government to step in and actually impose meaningful penalties for harming people and small businesses, and it has been systemically incapable of doing so for far too long.
Is the idea that an independent accounting firm would flag egregious money-making schemes by Hospitals? If both the Hospital and Accounting firm are owned by Private Equity, then there is no independent body with the right incentives to do this. Even so, I can't help but wonder why any accounting firm, even if independent, would antagonistically audit their customer (the Hospital). Feels like only a regulatory body should be involved in auditing to begin with.
Which brings me to a Bloomberg headline from today:
"How BlackRock's CEO Gets Paid Is Anyone's Guess" (To the tune of 37 million)
Well, this might be one of those psychotic ways these animals get paid. So in this fucked up multiverse, PE executives run some scheme through a Hospital to generate more revenue, have their own Accounting audit it and give it the green-light, pocket the cash, and say "well, everything is dandy because it's been audited".
They will be next, and tough. The owners of the firms who get money on the sale are all that matters. In American capitalism, doctors are just cogs to make money, and accountants will be too.
Republicans will basically be undoing Democratic work from now on because that gets votes now, while skirting the law as much as possible with executive orders. Democrats may or may not do the same, but no one knows who the next generation of electable Democratic presidential candidates are.
At 4 year intervals, this makes any serious empire building ventures (encouraged by legislation) very risky. We're basically coasting on inertia and USD dominance, and that is quite a lot of inertia, but Trump is doing his best to slam on the brakes.
fortunately, people make decisions outside of the Capitalism framework all the time.. those people include Doctors themselves. Think of Capitalism as a force of gravity in the system, but not the only one. Oversimplifying "america" mostly does not penetrate the topic as a real world system IMHO
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Or they could play dirty tricks. I think the previous is what they would be expected to do, and if you were an investor you might be able to sue them if they didn't.
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- In an emergency/urgent care situation, you can't really do a price comparison/shop - The pricing is opaque until they you receive the service. Even in routine/non-emergency situations, you get a quote for the services often 20-30 minutes into your appointment, even for annual exams, so it's pretty obnoxious to switch services at that point. - FWIU, Banfield and BluePearl both have a strategy where have lower cost exams to get patients in the door, but then make that up in super high testing/drug fees, e.g. a $300 UTI test that labs charge $30-100 and 10x upcharges on antibiotics readily available from Chewy/neighborhood pharmacies.
What? You think the average customer knows or cares about that?
Allow me to introduce you to VMware. It was bought out by Broadcom. That sounds like a tech firm buying a tech firm. It isn't really.
Broadcom is (not really) run by Robert Redford from the film "Pretty Woman", except this asset stripping exercise is rather more unpleasant than even his efforts.
VMware used to have a flourishing eco system. It managed to largely throw off plagiarism threats from when it was ESX vs ESXi. It was basically Linux (Redhat) with knobs on and fuck you freetards but here's a freebie version that we have cobbled together.
Anyway.
I was a VMware fanboi for roughly 25 years and now I am not. I was also a Windows (MS) fanboi too for some decades. Can't be arsed these days but I will.
Dealing with Windows and VMware is really unpleasant these days.
Realistically, 75% of professionals aren't worth their salt & so many people will just continue going to the PE firm controlled places since switching won't get them any better service & the 2 hold out firms in this scenario would pragmatically raise their prices.
It will, but as you note it will cost more.
As someone who has extensive experience with many vets due to rescuing and fostering with multiple orgs and having animals of my own, I'll take the local firms any day of the week. Although there are some bad ones, and although it can be hard to get your foot in the door, local vets as a whole offer better availability, a more timely experience, a lack of upselling, someone at the front desk, and generally more competent vets.
Experiences I've had with the other places make it very clear they're paying their vets bottom dollar, want to extract every one of my dollars possible, don't care how much of my time they waste doing it. Strangely, although they always want me to review my experiences, they never seem to take the criticism to heart.
Most people would rather get rich quickly by selling out, instead of putting in effort to get rewarded far in the future.
It can be not so much greed as running for higher ground when the MegaPetCo tsunami comes to town.
Edit:
> DUBNER: We did a series on private-equity consolidation in the pet-care industry, and we found a lot of problems there for employees and consumers. But we also learned something that seems to apply to a lot of the human healthcare industry. If you look at nursing homes, doctor’s offices, dentists offices, what we heard is that the founders of these offices and companies, when it’s time to retire, they might prefer to sell to one of their junior partners. That’s what often happened before private equity was around. But now those junior partners have so much debt from medical school or veterinary school or whatever that they can’t afford to buy the practice. So the only likely buyer is an outside investor like a private-equity firm. The P.E. firm is satisfying a real need there, but the resulting roll-ups or consolidations are often worse for existing employees and worse for consumers. Do you have any thoughts for how that might work differently?
https://freakonomics.com/podcast/the-biden-policy-that-trump...
On the high side, there's loads of money sloshing around with—especially since the end of ZIRP—no "safe" place to put it. They "need" ways to guarantee high returns over relatively short periods in order to justify their continued access to a never-ending supply of yachts that have other yachts docked inside them; vulture capitalism is a reliable way to do that for people with absolutely no scruples or understanding of (or care about) long-term effects.
On the low side, much like DangitBobby noted, there's much less money available to either buy the business of someone interested in retiring and passing it along, or to start your own.
The third side is that moneyed interests have captured government to an unprecedented degree—even before the current administration came in, with its "burn down everything that helps people and hand the ashes to the wealthy to sift through for loose change" policies. All the protections that should be stopping private equity from doing these things are reliant on government to step in and actually impose meaningful penalties for harming people and small businesses, and it has been systemically incapable of doing so for far too long.
It's a little late to assume accounting firms are 100% reliable
Which brings me to a Bloomberg headline from today:
"How BlackRock's CEO Gets Paid Is Anyone's Guess" (To the tune of 37 million)
https://www.bloomberg.com/opinion/articles/2025-05-07/how-bl...
Well, this might be one of those psychotic ways these animals get paid. So in this fucked up multiverse, PE executives run some scheme through a Hospital to generate more revenue, have their own Accounting audit it and give it the green-light, pocket the cash, and say "well, everything is dandy because it's been audited".
At this point the comedy just writes itself.
At 4 year intervals, this makes any serious empire building ventures (encouraged by legislation) very risky. We're basically coasting on inertia and USD dominance, and that is quite a lot of inertia, but Trump is doing his best to slam on the brakes.
Dead Comment