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Comment by Aurornis | Hacker News Reader

> I wonder if we’ll ever get the guts to outlaw PE somehow

PE is just a type of company that participates in the act of buying and selling businesses.

You can't outlaw buying and selling businesses. You can't outlaw people working together to buy companies with financing.

Yes, there are a lot of PE horror stories, but there are also 100X more invisible private equity style buyups that you never hear or think about because nothing is going wrong.

Many of them actually improve when they roll up the company. My local eye doctor was bought out by a PE firm. They came in and installed all new diagnostic equipment that was standardized across their locations. They now nail my prescription on the first try and it's faster than ever before. The service is also more streamlined. This is the kind of thing that nobody ever thinks twice about, but it happens all over the place.

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> You can't outlaw buying and selling businesses.

Sure you can, and I'll argue that we should.

Competition is the only thing that keeps businesses honest, and acquisition is the antithesis of competition. Shut it down and force companies to compete rather than for the richest to snap up their competitors, and to force startups to dream of sustainability rather than a fat exit.

So companies should live and die with the founder? Or only be able to be transferred to their heirs? That's going to be amazingly unstable compared to a system that allows businesses to change ownership.

> Sure you can, and I'll argue that we should.

That really makes no sense at all. That would mean you can't sell your stake in any company which not only makes IPOs, and having a stock market in general, impossible, it would also kill VC funding of start-ups. The only thing that would still be possible is bootstrapping your own company, because you also cannot get any bank loans as using the company as collateral is impossible. This idea is a guaranteed way of completely destroying your economy.

You haven't thought about how bizarre this would be. All growth and declines would have to be organic, so rather than the obvious winner just buying the market loser and cutting 20% of staff, the loser would bleed-out over years. Companies also couldn't sell divisions they're not interested in, so rather than finding someone who cares, they'd have to go through the motions to not lose money while letting it slowly die. It'd be a lot of zombie companies.

I'm not necessarily onboard with what OP was proposing, but as a counterpoint to your hypothetical, what is stopping those losing businesses from simply closing rather than just bleeding out until death? The way this is phrased makes it sound like a company is obligated (required?) to slowly wither and die.

They'll close once they start losing money, but that might be drawn-out, and since you can't sell, the incentive is to draw it out as long as you can.

I don't know if this is something that is prevented by our current system. This is more or less what GM was doing before the 2008 bankruptcy (The vague story I remember from the time was that they knew they had to get rid of money losers like Pontiac and Oldsmobile, but decided dealing w/ the dealerships wasn't worth it)

it is probably easier to just put limits on the kind of ownership that is possible. like, a worker-owned business can't really do this kind of thing

> My local eye doctor was bought out by a PE firm.

All new equipment and better service is great for you. There are serious disadvantages for your eye doctor though: he no longer enjoys the autonomy and freedom of his own medical practice. Lack of autonomy is a major cause of insatisfaction in medicine. Hopefully he got some fat stacks of cash to compensate for that. As a society though, nothing compensates for the fact we're approaching the fabled "you'll own nothing" future.

It's also early days - see in 10 years whether they're still doing a good job, or if they cut costs to the bone to preserve profitability.

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