this sentence is incoherent. no one is being taken advantage of
no exploitation of either party is necessary
The problem is: what looks like a series of independent mutually-beneficial transactions, is actually a series of correlated transactions. Each such deal makes the particular market segment worse off for both customers and individual owners like you. It's a subtle thing at first, but after enough such deals, the whole thing collapses: the remaining owners, who didn't get the deal yet (or refused), find themselves unable to compete with what's now a corporate chain of previously owner-operated businesses, and they sell out too, or just close shop. Customers end up being massively screwed. Then there are the usual secondary effects to the community fabric, that happen when mom-and-pop stores get replaced by corporate franchises.
The above is the problem. Now what makes the buyers (PEs) blameworthy is that they're fully aware of how this plays out. They understand the problem described above, and they do their thing anyway, because what's a problem for you and me, means even more profit for them. The mutually beneficial transactions are a bait - the buyer seemingly leaves money on the table, but in reality, they're just ensuring they can line up enough such purchases to collapse the market segment, and mine it for all its worth.
To "take advantage of" an inanimate object doesn't mean "someone" is being taken advantage of. It's just an articulation of the concept that makes them money, it's no more nefarious than saying that baby food makers take advantage of people not wanting their children to starve to death (Nestle notwithstanding).
A ship captain can "take advantage of" the tide to leave the harbor, without taking advantage of anyone.
Individually, all trades seem to be fair, even advantageous to the seller. However, taken together, they end up screwing the sellers and everyone around them, while massively benefiting the buyer.
And the insidious part is, there is no single transaction you can point at to tell the seller they're doing the Wrong Thing. Individually, they're all exemplary cases of benefits from voluntary trade. It's only when you group a bunch of them together, that things suddenly go south.
This is where I disagree. How are the sellers being screwed?
I completely agree that the wider community is being screwed by the string of sales, but I don't see how an individual seller gets screwed, except inasmuch as they are part of the wider community.
Those people aren't spherical cows in an toy ethics thought experiment. They are real people, with complex lives and many things competing for their care (like e.g. families). They all care about not selling out or hurting their customers... to some degree. Some to larger than others.
The simplified algorithm the PE companies are doing is:
- Estimate the upper bound of how much most - say, 80% - of the owners of targeted businesses care about things;
- Express that upper bound in dollars over the value of business, call that number X;
- If you can still make a profit while overpaying by up to X for each bought business, start making offers; otherwise, find a different target.
There's little point blaming the business owners, because the transactions are initiated by the PE companies, and they specifically target businesses they know they can get anyway. They're taking advantage of the idea that people should be free to sell their business for a fair price if they want to.