> When a fire truck fails to deploy in a burning building and four people die, the cause isn’t just mechanical failure. It’s a business model.

leaves

There are other greed-based systems which also eat themselves, but we live in the era of capitalism as the vehicle of self-destruction.

Many of us won’t be alive to see it, but it will result in the fall of the US. Maybe it will be 50 years from now, but I suspect sooner.

Once enough safeguards get systematically removed, the rate of growth of the beast becomes unstoppable.

Eventually the few who have not been crushed and who have the (illusion of) control will have to wall themselves off in heavily guarded compounds to prevent the masses of desperate poor from overrunning them. It will be like so many dystopian stories that have already been written.

I see no way to correct it now, at least not in the US. Moneyed interests clearly have control of the government. The few good civil servants and elected officials are increasingly under pressure to give up their principles and accept pay-to-play, lest they lose their jobs or what little power they had to do good.

This isn’t just a right wing problem (US right), because the same money flows to the left. At the end of the day, one side may indeed be more cruel, but they both support the same system.

The new PE overlord will do things like send you a bill for inspection after you inquire about their pricing ("Well, our guy was in the area so he took a look!") while billing you for gas from their home location.

This is disgusting on so many levels—no competition here at all, just oppression by those with a lot of money.

Please edit out the AI-isms in your article. If you do, let me know and I’ll come back and read your thing.

Thank you for your attention to this matter.

Another anecdote is private equity buying up psychologist firms providing therapy to people. The dude told me people walk in with their chat gipity transcripts. The goal of the PE firm was to buy out and make money and then somehow offer some software to give these people a "productive" chat gipity conversation

Just get the fuck out of here already? How many fingers up your own ass do you gotta have to keep up that kind of work?

If it sounds substantial, it’s because it’s paraphrasing actual reporting, or it’s hallucinating. I found one of article it’s plagiarizing [1]. Other “articles” on the same site link to the real sources that the AI is regurgitating.

The topic is interesting and discussion is thoughtful, but I’m saddened to see it under a fake article like this.

[1]: The intro is an AI rewording of this: https://www.atlantanewsfirst.com/2025/12/08/burnout-fire-tru...

1. No one forced these people to sell. Is the idea that you can’t sell to an entity with more money? If you block that good luck with the world economy.

2. If above is ok is the idea that the new owner is inherently worse because they have more money, whereas as the smaller would be OK then where are the new entrants?

3. Going to the article it is clear enough. These industries just are not lucrative to begin with. PE buys them and raises prices, but this only works because people complain instead of starting rival business.

4. Somehow leaving money on the table in the form of a backlog is bad? Why don’t others start a business and take those orders? Why don't they? Not profitable or worth the hassle.

Well there you go.

Separately, American manufacturing just seems very uncompetitive.

If you just keep gutting companies with leveraged buyouts, you're not taking on any real risk.

If you're buying up firms that deliver "essential services", you're likely engaging a monopoly. Again, low risk, high reward. A direct violation of the rules of how investments should work. Regulate the monopoly and this goes away.

It's a good thing that profit margins for manufacturing have increased, it's a bad that cities don't want to pay what a firetruck is worth in a post-industrial country.

Now they are buying fire stations, dentist offices, ski resorts, whatever the fuck they can think of and then raise the prices. Something needs to be done to stop this.

> The result is a backlog that reads like a financial opportunity in earnings calls and a crisis in every fire station in the country. As of 2025, REV Group’s backlog stands at $4.5 billion. Wait times for a custom fire truck run to four years. Prices have doubled in a decade: a pumper truck now costs around $1 million; a ladder truck runs over $2 million. Profit margins in the industry have tripled — from the historic 4-to-5 percent range to over 13 percent.

The article goes on to talk about how a backlog is actually genius. Here's a quote from a senator:

> “This didn’t just happen to you accidentally. This is a business decision, isn’t it? You keep these backlogs like this. […] Another word for this would be a heist. This sounds to me like private equity came in; bought up all of these small companies; combined them; shut down their production; rolled up a huge backlog; massive profits; stiffed these guys; and now you’re making out like bandits.”

So you make money by ... not delivering? I'm missing something.

> The fire truck industry is the most publicly documented case, but the underlying playbook — acquire, consolidate, reduce supply, extract margin — appears across essential sectors with alarming consistency.

Sure, anyone can reduce supply and increase prices if they're a large enough supplier. But companies don't produce up to the point where marginal price is equal to marginal cost out of the goodness of their heart. It's the profit maximizing level. This is economics 101. The article doesn't even try to explain beyond hand waving. No one cares about profit margin, they care about maximizing profit, and you don't do that by creating backlogs. So something is off here and the author is either too incompetent to ask basic questions or just wants to write another PE bad article

https://www.thebignewsletter.com/p/did-a-private-equity-fire...

Other examples not mentioned: eggs, kids athletics, I’ve heard stories in fintech services as well

1.Shareholder primacy. Under Delaware corporate law (which governs most large U.S. public companies), once a board decides to sell, directors have a fiduciary duty to maximize the price shareholders receive. A premium cash offer from a PE firm is hard to refuse without legal exposure.

2.Interest deductibility. The tax code lets companies deduct interest payments but not dividends, which makes debt-heavy capital structures more tax-efficient. LBOs exploit a feature of tax law that exists for many reasons unrelated to private equity.

3.Freedom of contract and limited liability. Sponsors can put a thin equity check into a holding company, have that company borrow on the target's assets, and walk away if it fails, because limited liability is the foundation of corporate law generally.

Sure, and it's often a real loss to customers, but are you suggesting mandating that you vet the person you're selling to for their business aspirations and then have some kind of legal covenant that binds them to those stated aspirations, enforced by...something?

Otherwise we can just be satisfied with shaming them, but seems like an awfully convenient way to sidetrack this conversation from the obvious remedies.

> That cash out comes from the future business increasing profit, which is over the longest term cutting service quality.

Which is a problem when the same person buying also bought up all the other dentist offices, so there's no choice, let alone competition, in services.

Eliminate that and the sweetheart buyout offers make a lot less financial sense and we can at least prevent the scales from tippng so steeply toward PE buying up all the dentists, hospitals, retirement homes, HVAC repair, roofing companies, pest control, etc etc

Unfortunately people are mortal and everything ends. Even if a someone didn't sell their business to PE, the trusting relationship is over once they retire. There's no guarantee that someone new - even if vetted - is going to be as good as the previous owner.

We have spent the last 50-ish years "legitimizing" things like PE buying up essential services and implementing cost cuts. When I say "legitimizing", I mean we keep removing the avenues for the "regular people" to legally and formally reduce the harms that this sort of business brings about. It becomes just a fact of life: people can come in and do this and you have to "deal with it".

When you have people dying, watching their streets crumble, have garbage piling up, etc., you can't just think that "regular people" (or maybe "the little people", as some businesspeople might view them) will "deal with it" forever, regardless of how much legal, financial, and political cover you provide yourself. At some point, there will be a reckoning. In that case, you'll prefer that it be through a regulation change, lawsuit, or lost election/ballot initiative.

You can only make money in an LBO if you meaningfully improve margins or you grow massively such that the debt portion of enterprise value becomes smaller. In both cases, the company is better off than it was before.

I do think there are limits to the value that PE can bring and there are many bottom feeders going into businesses they shouldn't, like fire trucks. But not all of PE is bad.

The better solution is to tax PE capital gains as income so they pay their fair share of taxes, making good deals harder to find, drying up some appetite for that highly saturated part of finance, and returning more value to communities when they do succeed.

The point of the exercise is not to suppose what other things could have been different to allow these two hypothetical companies to end up in the described state. The point is to actually freeze everything else, do not allow it to vary, and look at the backlog in isolation. Obviously such a situation would never actually arise. Even if things were trending in that direction, the two companies would very quickly diverge from ceteris paribus.

Obviously having a backlog is better than no backlog because unless you make a new sale tomorrow, you have a problem. You will have idle capital and labor resources. Which company do you think has easier access to credit?

Private equity is very much interested in the margins. That is one of the key differences between private and public companies. Public companies are under pressure to grow at all costs. PE would probably be satisfied to make half the profit and double the margin, especially if it also happens to position the company for a more favorable sale. Would you rather buy a business that's at 5 or 10% margin?

The depth of the backlog also happens to be a pretty decent proxy for how much competition there is the market. A deep backlog means there isn't another firm around to fill that demand. That makes your company look better.

Let's go a little left/up the funnel. Imagine two startups, all things equal, their sales funnel goes wide > qualified > sale. They consistently convert 5% of qualified leads into sales. Do you want to be the company that has zero qualified leads, or $4.5b of qualified leads?

There's only one company: the one with the backlog. The other company either went bankrupt or was bought out and consolidated into the first company.

You will not find any investors.

The investors that want to invest in fire trucks already invested in the PE fund and will give them money over any new start

That’s the point

There’s no money elsewhere.

... they sold the original business to retire??

PE is a bogeyman, emblematic of a problem but not the problem per se. The problem is leverage. Critical services should have a borrowing limit and prohibitions on any pay-outs to owners while any leverage is in place.

Kicking out private equity and replacing them with family offices doesn’t solve anything; removing the debt does.

[0]: https://fixedincome.fidelity.com/ftgw/fi/FIYieldTable?popupM...

They moved around the year 2000 to accounts that don't have the AT LEAST clause, and they earn what they earn, but due to the backlog of people still retiring that were grandfathered in, its wrecking our state.

My city has a huge budget deficit, but 24% of its total payroll budget goes to the public retirement system to 'catch up' from years when it did not make 8%. Next year or two, that is supposed to jump to 28% of payroll.

Problem won't start getting better until something like 2034 when the boomers start 'leaving the retirement system'

(it's a blog summary of a much longer, and rather esoteric, academic article)

There are also many benefits you don’t notice because they don’t bother you

Mass index fund investment is basically socialism but stupid. My retirement money is going to get invested in the SpaceX IPO against my will. The market is not efficiently allocating capital, it's structured to allow elites to skim off the top while forcing middle class people to subsidize them.

For the curious, above is how Crassus died.

TLDR: Got over his skis and mad with power and money. Decides to invade Parthia. Gets wrecked by horse archers. That ends up being typical for Romans, but this was the first-ish time that happened. Some of those captured legionaries may have ended up in China, though it is unlikely.

https://en.wikipedia.org/wiki/Liqian#Lost_Romans_myth

sigma

The "consumer harm" standard is idiotic.

AVGO/Broadcom in some way acts like a big PE firm, rolling up other software companies, integrating them into their huge suite of offerings, ousting the new integrated offering's competing tools from the customers environments and selling the increment, and cutting off smaller customers not willing to subscribe to the huge suite.

A core function of enterprise sales is figuring out where that opportunity cost threshold is. PE often targets industries that are currently (in their estimation) priced well below that threshold.

https://news.ycombinator.com/item?id=48295440

Moved right in with the same old price so I didn't even have to expand the budget and they threw in training for free!

He has been in the role over a decade.

I find it very hard to believe that if pensions didn't exist, nobody would have come along and exploited the same loopholes.

In a hybrid scenario where there is still a market, we would ... collect more taxes to pay for this stuff? It seems like you came up with a pithy response and tried to back up into a critique that doesn't make sense.

Historically (with all the accuracy you get when you summarize all of history) raising an army and not leading it was effectively telling everyone that you should be replaced by whoever did lead it.

Even if they are lucky enough to have no debt, I don't think the average graduate has $10,000+ in the bank to spend. I have never started a business so I honestly have no idea how hard it is to get a small business loan for something like this, maybe it's easy, but even so it's certainly risky.

It's true that private equity is dominated by institutional investors. One reason for this is that the investments are generally deemed too complicated, illiquid, and risky for retail investors (although the Trump administration is trying to change this).

Additionally, if we added the kinds of regulations, reporting requirements, standardization, etc, that would be necessary to scale this model to hundreds of thousands or millions of investors participating in an informed manner, we would simply recreate public markets.

Freakonomics recently did an episode on this that I thought was pretty good: https://freakonomics.com/podcast/is-the-public-ready-for-pri...

They've done some pieces on private equity in the past too: https://freakonomics.com/podcast/are-private-equity-firms-pl...

No, that's now how they work, if that was the case, there wouldn't be any need for PEs to buy and enshitify the assets we are talking about here. Your current description contradicts your previous comment.

I'm not going to explain it to you, there's enough information about the topic.

> At the ballot box.

We don't vote for PEs. And who we vote for makes no difference to them, these truths are so basic, it's a shame you don't know them.

Now... if you mean IRAs then yeah... that's 99% of all private "investors"

EDIT: I forgot all about State and Federal pensions.

https://en.wikipedia.org/wiki/Employee_stock_ownership_plan

An ESOP is where a portion of or an entire company is sold to the employees. Our company took out loans to acquire the shares from the former owners and shares are disbursed to employees yearly instead of purchased by employees. It took 5 years to fully buy out the former owners, so we’re a 100% ESOP now and we just finished paying off the loans taken out to buy out the former owners.

An ESPP just gives employees of a company the option to buy shares at a discount.

Summary of the old regime: Mergers that lead to 5+% market share were blocked.

Then the "consumer harm in terms of prices" was adopted. Which swung the pendulum the other way. That is the fundamental economic policy now. Which has lead to abhorrent results.

I wrote a comment on previous post that was about how consumer harm standards have warped the discussion on tariffs: https://news.ycombinator.com/item?id=48096236

Spurious correlation. Few experts (economists) think old regulations caused economic growth.

If we really want to recreate post-war growth, we should destroy half our infastructure and fight a world war. Then, in the years following the end of that war, we can experience catch-up growth.

They can also offer some really nice benefits like accessing your pension income at 55 which can be a substantial portion of your last year's salary, and you can keep working elsewhere if you want.

They use money to turn value into money, which they then use to turn more value, into more money. And in the end, they have a lot of money, and all of the value is gone.

Huh? Why is there nothing wrong? Yes they wouldn’t make the investment if they didn’t think they had a way to get ROI, but how does that entitle them to one at any cost or make it necessarily moral?

As an extreme example, If I invest to create a company that is clearly exploitive and addictive, nothing is wrong in principle and I’m entitled to my roi?

The HVAC for example - the large firms around you do not run HVAC/plumbing/electrical, they run marketing companies that happen to schedule and bill H+P+E service appointments.

That being said I've never heard or encountered a single services company in the US that can't find business, in fact it's the opposite. They're trying not to drown themselves in front of a fire hose.

I guess what I would like to see is a pathway to making it easy to buy or start up crucial businesses like a plumbing business, HVAC company, etc. As the current generation of owners want to sell and retire, we should make it easier for people to be able to get in there and buy these companies before PE can.

...no. It doesn't even matter what the rest of the words in the question are. Just no, lol.

> They need to be paid out somehow.

No they don't. Lots of pensions, especially the not-gilded ones, go bankrupt.

In fact, that's precisely what happens to pensions of companies that are acquired by PE. The company gets stripped for parts, it goes bankrupt, and PBGC covers a fraction of the affected pensioners' payouts.

In other words, with or without PE, bloated pensions ultimately end up being the taxpayer's burden.

I'm not trying to put all of the blame on individuals responding to the pressures being applied to them. But neither am I accepting their abdication of the responsibility to act with honor and courage in the face of those pressures.

Not only is that politically attractive, I think it’s more good than bad as public policy.

Turning back to PE/LBOs:

Having limited liability entities (companies) also serves good public purposes. Having companies being able to borrow money also does. Having companies being able to own other companies also does. I think that’s the only three ingredients you need for the PE model to operate and I don’t think that the public is helped by barring any of those three things.

https://en.wikipedia.org/wiki/List_of_colleges_and_universit...

Do they have to be paid out in full, though? I remember cases in the past where a company went bankrupt and had to renege on some parts of pensions, so maybe you'll see that again?

Private Equity/Capital IMO is a pretty fascinating topic and I have some nuanced thoughts on it but this isn't the forum to have that conversation. There are great books out there on it though and I highly suggest reading them.

The trick is that the business owner has a good relationship with his customers. After the PE investors run it into the ground, they can credibly reach out to customers directly, assure them that the adults are back in charge, and basically be a hero to the old customers who hate what the business became.

https://privateequityvet.org/vet-list/ https://whoownsmydentists.com/ https://ledger.worseonpurpose.com/

Essentially anyone - other PE funds, competitors merging, the general stock market if you take it public. And they're not wrong want to buy it - there's a valuable business there - they're just bad at assessing the right price.

> And when does word get around, and the pool of suckers dry up?

One born every minute. And it's hard to even notice you're being taken for a ride as opposed to mismanaging the business you bought or just being unlucky.

Grants Pass, Oregon, has privatized fire. And there's three companies that service it, one is good, one is alright and the other... well, I was going to tell you to watch a YouTube video but after years its been deleted. Some hints: Title "Worst Fire Department in America". They roll up to a fully involved house fire with two engines that are 50+ years old, are hamstrung by the fact that they are staffed with kids in jeans and wildland coats (bunker gear, let alone SCBA, are nowhere to be seen), actually getting water on the fire is an issue because 1) someone has to sit in the cab to keep their foot on the throttle to give the pump any power (this "notmally" is controlled from the panel) and even then the pump is screaming at 3000+ rpm about to die any minute (this is maybe 2, 2.5 times what the pump runs at), there's no sense of strategy.

They call for mutual aid from Rural/Metro who shows up, helps them get a little ground on the fire, only to be told to leave the scene (so the company doesn't have to pay them) and the fire predictably takes over. It was horrific.

At least, though after too many of these calls, the Oregon Fire Marshal actually de-certified this company.

But this very thing happened not that far in the past: https://www.nbcnews.com/id/wbna39516346

The value of a company does include the value of future returns. The standard model is net present value. In theory, if the market is valuing those future returns correctly, a PE fund would probably just do the value maximisation through investment and genuine business rationalisation, and skip the financial engineering phase of the cycle. I believe this is actually what most PE managers would prefer to do. They generally don’t actually want to burn their efforts for a short term fake valuation boost. They are still people after all. It just seems to be what the market wants them to do, and they prefer money.

> the market is pretty bad at valuing companies

The market has always been bad, but probably more randomly bad, historically. Different people had their own finger-in-the-air methodologies and an estimated market value of a company had a lot more random noise around it.

The issue is now that ~every large institutional investor is valuing companies in the same wrong way, which creates opportunities for, essentially, an arbitrage between reality and their dumb models which these types of PE funds are exploiting.

It also creates systemic risk to the financial system. When everyone is making the same mistake, “independent” market participants aren’t really independent. This is in essence what any bubble is, but usually isolated to people misreading the fundamentals of a particular sector. If the techniques behind financialisation are themselves a bubble, however, we could be in for one hell of a pop if the market realises. Like when the market realised they’d been valuing subprime mortgage books wrong in 2008.

Yes you can pick up cotton at a lower labor cost with slaves, but you can't charge the slaves rent, sell them useless clothes, tax them, etc.

Slavery is bad economics. If you want your economy to grow, paying workers is not bad. Economic growth isn't zero sum.

Same thing happened with a restaurant - nobody wanted to buy the business so it shut down, even though you could have bought the whole business for the cost of the building, basically.

(There's a path for entrepreneurial "youngsters" - identify these businesses 10 years before, and become a valuable employee in such; I've seen them given away for a song to such. Of course, in some of them they also ended up with the daughter, so ...)

The classic example is airline deregulation which happened under Carter. The real cost of flights is way, way down since then. But this doesn't stop people from complaining about how "flying is a worse experience now" and wishing for a return to inane regulations.

post WW2 the world basically outside of the US blew up and the US pumped a ton of money into europe+asia to bolster it.

it's easy to be #1 when everything else burnt down

Your cause and effect is wrong.

The US doesn't fail to attempt to enforce, the gov representatives often get paid to not enforce by said corporations who have been allowed to put money into their campaign for election/reelection.

Nobody likes this state of affairs so we are asking you to stop strawmanning and start steelmanning the posts you are responding to.

You are clearly not dumb, so stop responding to the dumbest possible and easiest to dismiss interpretation of other people’s comments and instead go deeper

It's like taking out a mortgage on a house, but letting the house owe the debt.

Most small-time single family landlords actually go above and beyond that and "pretend" the rental is a house they're buying to live in (or actually is, for a time) and get a "home owner's mortgage" which is even easier.

Large commercial real estate is sold and loaned based on future rental income, pretty formulaically.

Is that not the case for police unions in the states?

A Phoenix police sergeant who was recently in the news for other reasons was listed as having a total salary in 2025 of $430,000.

And yes, pensions are a major part of the PE funding, but not all of it. There are a bunch of incredibly rich people who are also profiting from all of this at exorbitant rates. Can we be mad at them instead?

Lots of success during the last admin for those paying attention.

https://www.ftc.gov/news-events/news/press-releases/2025/01/...

https://www.economicliberties.us/press-release/lina-khans-tr...

https://www.economicliberties.us/our-work/factsheet-the-ftc-...

I would prefer that! I'd prefer even more strongly that the debt be owed by someone else entirely, so a default isn't associated with me at all. If you're up for it I'd also prefer to use your credit card number to buy stuff on Amazon. But for whatever reason the law doesn't always seem to follow my preference.

I'm sensitive to your point about restricting formation of new corps. The system can't just be changed randomly without extremely careful thought. And often not even then.

And it should also prevent the acquihire.

It sure is.

> and it inevitably will result in the same situation

Why?

If the company wasn’t able to borrow money for itself, a wrapper company could which would still have very closely the same effect as being an asset-poor borrower.

Which would increase the rate of defaults (if they are authorized in the first place) and in turn increase interest even further. I guess the PE is always maxxing out the leverage on every deal at _just_ the projected break-even point for loan repayment? But that leaves no room for error or changing market conditions which also increase the rate of defaults and so on.

Pure parasitism.

Note that from the lender's perspective, the risk is the same and in a perfect-information universe could be mitigated by charging higher interest. The problem for society is the externality that the business's services get worse.

Sounds like a problem for whoever is providing the financing. Not really my concern unless you're saying there's some systemic problem it causes like with mortgage securitization during 2007. The lender will charge a high interest rate if what you're saying is true.

The information is captured the same way as most policy - via statute and precedent, and guidelines for enforcement agencies.

None of this is confusing, or even hard, except insofar as it's hard to fight against well funded opponents.

No, because if we had proper anti-trust they already would have both been broken up years ago.

I've read enough of the pre-Borkian (ie, pre-1980s) history of antitrust law to know this was very actionable.

They were not easily circumvented in that it required decades of funding and activism to nerf the Sherman Antitrust Act and its successors.

Antitrust enforcement can be done retroactively as well, if it appears that a large company abuses its financial firepower to undercut competitors or a marketshare gets too dominant.