Read about True Value hardware declaring bankruptcy today: https://finance.yahoo.com/news/true-value-declares-bankruptcy-sells-174128698.html
Which seemed odd to me, as they've been around for long time selling low-priced items.
It took me exactly one search to find perhaps another reason beyond the claimed "the housing market stalled and consumers have become far more picky about discretionary purchases like hardware” for the news:
Private Equity sucks the life out of every company it touches. Fucking parasites.
@Jackiemauro a lot of cocaine dealers might have to get a side gig to make ends meet.
@Jackiemauro @womble i wonder if you could outlaw private equity without outlawing some basic tenet of how private business works that would make it unenforceable. would genuinely be interested in how this would work from a policy/legal perspective. could make a big difference if it was possible — somebody’s prob thought it through!
@sabbatical @womble also curious on this point!
@sabbatical @Jackiemauro for starters, you could stem the tide of PE firms bleeding acquisitions dry with excessive "management fees" by making payments to related entities non-deductible. As a bonus, that would also largely kill off the offshore tax sheltering scam. Whether dodging taxes is a "basic tenet of how private business works" is a question left to the reader.
@womble @Jackiemauro ah interesting. would that need some mechanism for differentiating from “legit” payments for service? (eg. paying a co to maintain your website or clean your boots, for example)
@sabbatical @Jackiemauro @womble the whole process of forcing the company being bought to hold the loans for its purchase is so unbelievably weird that it should be strictly banned yesterday. When someone wants to take over and wreck a thing, at least leave them holding the bag.
@ATLeagle yeah that's really weird and should be stopped somehow, but I'm not as sure about how to make it happen. It may very well get caught by the "no tax deduction for payments to related entities", since the money from the loan would go to the owning company, which is related.
@womble @ATLeagle @sabbatical @Jackiemauro
I'd suggest a couple of small reforms that might help:
First, you may not issue stock buybacks if you have any outstanding loans. Prior to Reagan's deregulation, stock buybacks were illegal in general. I don't think they're bad on their own, but the fact that a company can borrow money and then distribute that to shareholders causes a lot of problems. In general, I see stock buybacks as the flip side of stock issues: you can borrow money from shareholders by issuing stock and you can repay the loans with buybacks, but you shouldn't be able to repay an interest-free loan with a loan that charges interest. This shouldn't really need regulation: banks could just make it a condition of business loans, but for some reason they don't.
Second, you require dividends to be paid out of operating profits. You may not pay a dividend while you are making an operating loss and the amount of dividend that you're able to pay is limited by the operating profit that you're making. Selling assets is a capital gain, not operating income, so doesn't enable a dividend.
This doesn't solve all of the problems, but it limits the most blatant kinds of corporate plundering. I don't know how you'd prevent the kind of thing that killed Red Lobster, where you sell the assets to another company and then lease them back and go out of business paying the rent.
@Jackiemauro @sabbatical @ducksauz @mweagle nope. Prior to Reagan the SEC probably would have forbade it.
@sabbatical @ducksauz @mweagle
Would anything be lost if PE’s business model was outlawed?