Private Equity Is Sitting on $5t of Existential Dread

Defined benefit pension plans shouldn't be a thing in the first place: they're too risky for workers, employers, and taxpayers alike. All pensions should be replaced with defined contribution plans like 401(k) where assets are safely held in individual named accounts.

Financial entities you rely on (pension funds, insurance companies, and universities among others) invest, and you may be getting access yourself thanks to Trump!

> IMO any business over a certain size should be forced to be public and no option to go private again.

What on earth is the rationale for this policy? If you build a successful company, you're required by law to give up control?

That's the opposite of what happens with PE. PE firms don't buy fairly priced, well run businesses. They (typically) buy underpriced, poorly performing but cash flow heavy businesses that would benefit from leveraging up and making operations more lean.

Think about it, if a business is fairly priced and well run, PE firms have no incentive to buy it because where do they generate returns?

I don't like PE firms but there's no doubt that they force businesses to operate better, and ultimately that benefits people like you and me who have retirement savings, because PE firms aren't getting their money out of thin air.

There's many flavors of private equity, but the predatory ones tend to buy businesses that are slowly failing, and turn them into something that hits a brick wall and completely fails.

If it was a mostly well functioning business with good prospects, likely the current ownership would be less interested in selling or a sale to similar ownership could be made.

Dental clinics owned by a dentist sell to a new dentist all the time. If they're being sold to PE firms, it's because the business of being a dentist is changing and not in a good way. Dental insurance is a hassle and doesn't pay well, finding customers can be hard without accepting insurance, hiring staff is hard (at least in my area), young dentists may not have the capital to buy out retirees, new equipment is expensive but patients like being wowed.

They have very strong incentive because debt holders have first dibs on the assets if EA goes belly up. Equity owners (ie. PE) are the last to get paid, so it's very much in their best interest that EA doesn't even lose a tiny bit of money, because such losses are magnified through leverage.