#PrivateEquity is *quite* a racket. #PE managers pile up other peoples' money - pension funds, plutes, other pools of money - and then "invest" it (buying businesses, loading them with debt, cutting wages, lowering quality and setting traps for customers). For this, they get an annual fee - 2% - of the money they manage, and a bonus for any profits they make.
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Cory Doctorow
•https://pluralistic.net/2023/07/20/continuation-fraud/#buyout-groups
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Cory Doctorow
•Ostrzeżenie o treści: Long thread/3
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Cory Doctorow
•Ostrzeżenie o treści: Long thread/4
https://pluralistic.net/2021/04/29/writers-must-be-paid/#carried-interest
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Cory Doctorow
•Ostrzeżenie o treści: Long thread/5
https://pluralistic.net/2023/06/02/plunderers/#farben
Private equity destroyed #ToysRUs, #Sears, #BedBathAndBeyond, and many more companies beloved of Main Street, bled dry for Wall Street:
https://prospect.org/culture/books/2023-06-02-days-of-plunder-morgenson-rosner-ballou-review/
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Days of Plunder
Maureen Tkacik (The American Prospect)Cory Doctorow
•Ostrzeżenie o treści: Long thread/6
https://pluralistic.net/2022/12/16/schumpeterian-terrorism/#deliberately-broken
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Cory Doctorow
•Ostrzeżenie o treści: Long thread/7
Pension funds, in particular, are the perennial suckers at the poker table. My parent's pension fund, the #OntarioTeachersFund, are every grifter's favorite patsy, losing $90m to #SamBankmanFried's cryptocurrency scam:
https://www.otpp.com/en-ca/about-us/news-and-insights/2022/ontario-teachers--statement-on-ftx/
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Ontario Teachers’ statement on FTX
www.otpp.comCory Doctorow
•Ostrzeżenie o treści: Long thread/8
https://pluralistic.net/2020/02/25/pluralistic-your-daily-link-dose-25-feb-2020/
But there's no depth too low for PE looters to sink to. They've found an exciting new way to steal from their investors, a scam called a "#ContinuationFund."
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Cory Doctorow
•Ostrzeżenie o treści: Long thread/9
https://news.bloomberglaw.com/mergers-and-acquisitions/matt-levines-money-stuff-buyout-funds-buy-from-themselves
Here's the deal: say you're a PE guy who's raised a $1b fund. That entitles you to a 2% annual "carry" on the fund: $20,000,000/year. But you've managed to buy and asset strip so many productive businesses that it's now worth $5b. Your carry doesn't go up fivefold. You could sell the company and collect your 20% commission - $800m - but you stop collecting that annual carry.
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Matt Levine’s Money Stuff: Buyout Funds Buy From Themselves
Matt Levine (news.bloomberglaw.com)Cory Doctorow
•Ostrzeżenie o treści: Long thread/10
https://www.ft.com/content/11549c33-b97d-468b-8990-e6fd64294f85
These deals "look like a #PyramidScheme" - one fund flips its assets to another fund, with the same manager running both funds.
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Subscribe to read | Financial Times
Financial TimesCory Doctorow
•Ostrzeżenie o treści: Long thread/11
A PE boss is supposed to be a #fiduciary, with a legal requirement to do what's best for their investors. But when the same PE manager is the buyer *and* the seller, and when the sale takes place without inviting any outside bidders, how can they possibly resolve their conflict of interest?
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Cory Doctorow
•Ostrzeżenie o treści: Long thread/12
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Cory Doctorow
•Ostrzeżenie o treści: Long thread/13
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Cory Doctorow
•Ostrzeżenie o treści: Long thread/14
PE is devouring the productive economy and making the world's richest people even richer. The one bright light? The FTC and #DoJ #AntitrustDivision just published new merger guidelines that would make the PE acquire/debt-load/asset-strip model illegal:
https://www.ftc.gov/news-events/news/press-releases/2023/07/ftc-doj-seek-comment-draft-merger-guidelines
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Cory Doctorow
•Ostrzeżenie o treści: Long thread/eof
https://twitter.com/matthewstoller/status/1681830706488438785
They're scared, and they're fighting dirty.
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Mastodon Migration
•Ostrzeżenie o treści: Long thread/7
saltedcream
•Allan Chow
•Coralie Renée
•Because it seems that it's quite hard to see case examples (or models) of being able to lead a life with principles, ethics and values while being able AND being able to earn money as well.
Let me know if my question is silly. ;)
Badger AF (he/him) DEMOCRACY
•