Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

Re:Stock and Bond Markets Dethroned: Private Fundraising Is ... by charlesdm on Monday April 02, 2018 @04:23PM (#16738933)

Just pointing out how you can siphon off massive amounts of money from passive investors because they invest in a certain fixed way. Smart entrepreneur (he's smart after all) would also likely raise his capital from a wealthy family office, thus take very few risks himself.

Private equity roll-ups are another example -- you buy one amazing asset at 15x earnings, roll up a few other ok or "meh" businesses that you can buy at 5 to 10x earnings, and go public with a group that then trades at 20x earnings. Preferably while loading it up with a ton of debt before going public. Who buys that? Why your pension fund, of course.

[ Parent | on HN ]

Re:Stock and Bond Markets Dethroned: Private Fundraising Is ... by MR4D on Wednesday April 04, 2018 @12:08AM (#16751811)

The p/e is basically irrelevant. You want to buy a company that is somehow broken (hence why p/e is irrelevant - if the company was barely losing money, the p/e would be infinite).

Buying a broken company allows you to fix the flaw(s), and then sell the fixed company back to the market. Even if the p/e were the same, if done correctly, you make a killing on the deal.

[ Parent | on HN ]