Private Equity - avoid buying crap from these sleazy buttheads

[LongHaul]

Private Equity operators are very short term oriented.  Their funds usually expire in 7-10 years and they are required 

to sell all their businesses in that time frame.   How would you run a business you were going to sell in 7 - 10 years? 

The obvious answer is that they are incentived to maximize short term profits and even cut muscle in the short run.

 

If you are buying an IPO of a private equity controlled company, buyer beware.  They want to sell for as much as they can in the short run

and want to leave the public holding the bag.   They have likely already cut all the fat and much muscle out of the business, raised prices too high, underinvested in capex,

and all types of necessary long term initiatives, etc.  Then a schmuck comes along and belives their bullshit and buys it. 

 

Then watch as competitors take share and eventually profits erode and the business falls apart.  (OK that doesn't always happen but I often see it)

 

Great to compete against the P/E buttheads though.

 

I was recently trying to have a tooth removed by an Oral Surgeon and The P/E backed office would not give me a price until I really pushed them (it was like pulling teeth) It rubbed me the wrong way and I found a competitor who would do it for half the price without the BS runaround.   I have frequently found these BS games when dealing the the PE guys who don't know business. 

 

 

[fareastwarriors]

PE-backed Vet/Pet care is terrible and expensive. Need to stick with my owner-operators but they are getting bought out left and right. 

[Red Lion]

1 hour ago, fareastwarriors said:

PE-backed Vet/Pet care is terrible and expensive. Need to stick with my owner-operators but they are getting bought out left and right. 

The mars corporation. 

[DooDiligence]

7 hours ago, fareastwarriors said:

PE-backed Vet/Pet care is terrible and expensive. Need to stick with my owner-operators but they are getting bought out left and right. 

 

I noticed that too. Was trying to find out if anyone was rolling up the industry and found nothing but PE.

 

Thanks for posting this @LongHaul as I have been watching these guys and waiting for an IPO. It would probably be wise to wait a while (post IPO), until the business settles. Mars is a monster in the space.

[Spekulatius]

1 hour ago, DooDiligence said:

 

I noticed that too. Was trying to find out if anyone was rolling up the industry and found nothing but PE.

 

Thanks for posting this @LongHaul as I have been watching these guys and waiting for an IPO. It would probably be wise to wait a while (post IPO), until the business settles. Mars is a monster in the space.

The ambulances (mostly PE owned) that are not in any health care system and can charge whatever are one of the biggest and most obvious rackets there is. That is one where legislation should come down hard.

 

As a shareholder, I am terrified when one of my holdings announces an acquisition from private equity. Most of the time, those business have been dressed up for short term performance and they command high multiples. It is hard for any acquirer to make those acquisitions work.

Edited April 13, 2023 by Spekulatius

[Red Lion]

2 hours ago, DooDiligence said:

 

I noticed that too. Was trying to find out if anyone was rolling up the industry and found nothing but PE.

 

Thanks for posting this @LongHaul as I have been watching these guys and waiting for an IPO. It would probably be wise to wait a while (post IPO), until the business settles. Mars is a monster in the space.

 mars corporation has been rolling up the industry for years. By far the #1 player. Buy a 3 musketeers and bravecto.  
 

Now petco is rolling up some vets as well, but not very full service unlike mars. 

Edited April 13, 2023 by RedLion

[Ulti]

20 hours ago, LongHaul said:

was recently trying to have a tooth removed by an Oral Surgeon and The P/E backed office would not give me a price until I really pushed them (it was like pulling

They are like cockaroaches…. Burrowed their way thruout dental / medical / mental health( residential, ioc, php)….they leave a pathway of destruction in their wake and do nothing for healthcare.. by the time I retired from practicing, I would say over half of the Dr’s I knew had sold out to PE…. Via a lump sum combination with having to Ramon in the practice for x number of years 

[LongHaul]

Ulti - care to share more details?   I am very interested.

 

 

 

[LongHaul]

The opportunity is competing against the PE firms. 

They are easy marks with high prices, bad service, gutted operations, burning employees out and pissing off customers.  

 

Can anyone think of a public company that is long term oriented that has its primary competition as PE firms?

One of the secrets to business - weak competition.  

 

[Ulti]

58 minutes ago, LongHaul said:

Ulti - care to share more details?   I am very interested

https://www.cainwatters.com/digitalblogs/sell-dental-practice-vs-private-equity/

This is a decent general based article that can pertain to all medical\dental\mental health offices.Most of the times, at least the deals that I've seen , your swimming with sharks and the #'s\ time commitment to continue practicing don't add up (occasionally it does ).

If your like me and ran a solo practice for 40 years...its a very relationship driven business ( you always have your DR hat on 1st ). For a variety of reasons which I wont go into; I gave my practice to a younger Dr. with lots of honesty and integrity. I might have financially come out poorer by not selling...but i sleep great knowing my patients are in very good hands

[Ulti]

1 hour ago, LongHaul said:

The opportunity is competing against the PE firms. 

There is that but the PE are buying well established businesses...if owner and staff remain; more difficult for a solo\newbie to compete.

[LongHaul]

31 minutes ago, Ulti said:

https://www.cainwatters.com/digitalblogs/sell-dental-practice-vs-private-equity/

This is a decent general based article that can pertain to all medical\dental\mental health offices.Most of the times, at least the deals that I've seen , your swimming with sharks and the #'s\ time commitment to continue practicing don't add up (occasionally it does ).

If your like me and ran a solo practice for 40 years...its a very relationship driven business ( you always have your DR hat on 1st ). For a variety of reasons which I wont go into; I gave my practice to a younger Dr. with lots of honesty and integrity. I might have financially come out poorer by not selling...but i sleep great knowing my patients are in very good hands

 

Thanks Ulti.

I really admire you for giveing your practice to a younger honest dentist vs selling out.    (I have had a lot of problems with dentists over the years and appreciate an honest one).  Maybe you can tell the younger dentist to step on the marketing pedal and take a lot of market share.

[Spooky]

2 hours ago, LongHaul said:

The opportunity is competing against the PE firms. 

They are easy marks with high prices, bad service, gutted operations, burning employees out and pissing off customers.  

 

Can anyone think of a public company that is long term oriented that has its primary competition as PE firms?

One of the secrets to business - weak competition.  

 

 

Constellation Software. Our main competition for acquisitions are PE firms but we have a much stronger value proposition for owner operators looking to sell their businesses. We also don't sell business ever so are in them for the long haul, not to chop and change them.