This! All day long.
For a minute Pre-COVID and the inevitable reassessment of my life choices, I was a Private Equity fund manager for a International PE org with significant assets in a wide spectrum of energy technology and agriculture ventures.
We operated with a slightly different approach; leveraging long term lease back of land and physical resources to the original operators with caveats, such as transitioning to Organic Certification and Cost Effective Staffing - read that as Wallpapering the Products' Perceived value while shorting the personnel costs through under-staffing and underpaying - with some real improvements which included international market access and lower ecological footprints by ceasing deforestation for expansion and removing toxic petrochemical fertilizers, herbicides and insecticides from the operations which are actually beneficial to both employees and the community.
However, the standard modus operandii in the industry was and still is some flavor of this get in, grow, leverage, and then exit approach.
Individual operations' access to low to no interest financing for OPEX and CAPEX was a fundamental uplift to the value of those operations. There existed the possibility of leveraging the organizations' histories to secure low-to-no interest loans equal to the estimated market value of those operations; spend that money to expand and partially offset the cost of acquisition (protecting the investment funds from market volatility) and leverage those expansions to reduce competition through assimilation or under-pricing the competition.
Often the 'exit strategy' can include sell-off of physical assets to cover the loans; or folding the organization and defaulting on outstanding loans.
The fund never actually has to be at risk, the upsides are up-front during the stage wherein the public sees the 'investment' into expansion of or improvement of goods and services before the inevitable degradation due to under-staffing and cost cutting through volume renegotiation or through changing suppliers and processes for cheaper and less effective inputs. When customer satisfaction and employee burnout reach a crescendo... move on.
The end for me was when the organization decided to use COVID as an excuse to cut an entire environmental tech development team from payroll; with zero benefits and the expectation that local government to provide the entire cost of team members and their families' survival, while selling the technology invented and being developed by those team members for approximately one dollar to show as great a loss as possible.
PE is at least as big a blight on the global economy and community well being as joint-stock monopolies serving a few majority shareholders.
We operated with a slightly different approach; leveraging long term lease back of land and physical resources to the original operators with caveats, such as transitioning to Organic Certification and Cost Effective Staffing - read that as Wallpapering the Products' Perceived value while shorting the personnel costs through under-staffing and underpaying - with some real improvements which included international market access and lower ecological footprints by ceasing deforestation for expansion and removing toxic petrochemical fertilizers, herbicides and insecticides from the operations which are actually beneficial to both employees and the community.
However, the standard modus operandii in the industry was and still is some flavor of this get in, grow, leverage, and then exit approach.
Individual operations' access to low to no interest financing for OPEX and CAPEX was a fundamental uplift to the value of those operations. There existed the possibility of leveraging the organizations' histories to secure low-to-no interest loans equal to the estimated market value of those operations; spend that money to expand and partially offset the cost of acquisition (protecting the investment funds from market volatility) and leverage those expansions to reduce competition through assimilation or under-pricing the competition.
Often the 'exit strategy' can include sell-off of physical assets to cover the loans; or folding the organization and defaulting on outstanding loans. The fund never actually has to be at risk, the upsides are up-front during the stage wherein the public sees the 'investment' into expansion of or improvement of goods and services before the inevitable degradation due to under-staffing and cost cutting through volume renegotiation or through changing suppliers and processes for cheaper and less effective inputs. When customer satisfaction and employee burnout reach a crescendo... move on.
The end for me was when the organization decided to use COVID as an excuse to cut an entire environmental tech development team from payroll; with zero benefits and the expectation that local government to provide the entire cost of team members and their families' survival, while selling the technology invented and being developed by those team members for approximately one dollar to show as great a loss as possible.
PE is at least as big a blight on the global economy and community well being as joint-stock monopolies serving a few majority shareholders.