Excellent summary of the 3 phases of PE, thanks for that.
I think it will be interesting to see how PE use lobbyists and politicians to craft laws to help them profitably rebirth the conglomerate, err ecosystem, corporation. Spending on lobbyists grew every year since 2016 in line with their massive spending in 2010 - 13...
I think it will be funny and sad to hear the business journalists start selling the counterfactual benefits to all of us of letting ecosystems further shift GDP from the poor and middle class to the rich.
I’m not sure how you get to monopolisation from that quote. It sounds a lot like using scale to increase bargaining power, which isn’t the same thing.
I worked for a PE backed SME some time ago and they were trying to do this.. they set up a platform of suppliers (inside and outside the portfolio) with the idea that we’d all get a better deal on procurement of non-core stuff (office supplies, IT, etc etc). The cost savings get to be multiplied and capitalised on exit.. and I think the PE firm itself got a cut from the suppliers.. which was sweet because they didn’t have to share that with their investors.
Now.. from my perspective as a decision maker in the portfolio company this was all somewhere between ‘unwelcome distraction’ and ‘utter shitshow’ and we just ended up ignoring it until it went away. I think it’s a terrible strategy which has had especially insidious effects where it’s been exported to the public sector and done nothing by put funnel public funds into the pockets of the consultant class… but, as awful as it is, and as worth as it is of having lights shined upon it, I fail to see how it’s anything to do with monopolisation.
This really reminds me of your description of Mellonism from Goliath: "a set of industrial and financial enterprises that aided each other and had interlocking boards of directors and even personnel. ... Being part of the Mellon system meant customers, credit, financing and prosperity, but also control. Being outside of it meant a constant battle with the Mellon interests."
Excellent summary of the 3 phases of PE, thanks for that.
I think it will be interesting to see how PE use lobbyists and politicians to craft laws to help them profitably rebirth the conglomerate, err ecosystem, corporation. Spending on lobbyists grew every year since 2016 in line with their massive spending in 2010 - 13...
I think it will be funny and sad to hear the business journalists start selling the counterfactual benefits to all of us of letting ecosystems further shift GDP from the poor and middle class to the rich.
I’m not sure how you get to monopolisation from that quote. It sounds a lot like using scale to increase bargaining power, which isn’t the same thing.
I worked for a PE backed SME some time ago and they were trying to do this.. they set up a platform of suppliers (inside and outside the portfolio) with the idea that we’d all get a better deal on procurement of non-core stuff (office supplies, IT, etc etc). The cost savings get to be multiplied and capitalised on exit.. and I think the PE firm itself got a cut from the suppliers.. which was sweet because they didn’t have to share that with their investors.
Now.. from my perspective as a decision maker in the portfolio company this was all somewhere between ‘unwelcome distraction’ and ‘utter shitshow’ and we just ended up ignoring it until it went away. I think it’s a terrible strategy which has had especially insidious effects where it’s been exported to the public sector and done nothing by put funnel public funds into the pockets of the consultant class… but, as awful as it is, and as worth as it is of having lights shined upon it, I fail to see how it’s anything to do with monopolisation.
This really reminds me of your description of Mellonism from Goliath: "a set of industrial and financial enterprises that aided each other and had interlocking boards of directors and even personnel. ... Being part of the Mellon system meant customers, credit, financing and prosperity, but also control. Being outside of it meant a constant battle with the Mellon interests."