Don’t Throw Me in That Briar Patch

The guest editorialist at the pink paper (Financial Times) has a sad because FTC Chair Lina Khan is actually enforcing antitrust law is discouraging mergers and acquisition activity by the private equity jackals.

So these PE parasites are finding it harder to make a buck?  What a tragedy:

The US is a beacon for global investment and innovation. And private equity plays a vital role in building better businesses, employing millions and delivering strong returns to support the retirements of millions of working Americans. Approximately 85 per cent of private equity investments support small businesses with fewer than 500 employees.

Lies, damned lies, and statistics.  I have never seen a case where PE makes things better over the long term.

Unfortunately, the Biden administration’s regulatory agenda is currently threatening this system, which supports workers and small businesses across the US. Federal Trade Commission chair Lina Khan used a recently filed healthcare case as an opportunity to take a swipe at it — all in pursuit of a radical new antitrust theory.

The truth is that the “buy and build” model that some private equity firms use helps a highly fragmented and cost-intensive industry such as healthcare become more competitive and expand access to care. Studies show that private equity-backed hospitals earn better marks on quality — meaning better care for patients. At the same time, private equity has filled critical gaps in the US healthcare system for decades, providing doctors, nurses and hospitals with the resources they need to treat patients and provide high-quality care.

What the chief lobbyist of the American Investment Council is calling, "Buy and build," is monopolistic and anticompetitive behavior, where they acquired the overwhelming majority of anesthesia practices in a region, and used this to keep other competitors out, explicitly cutting deals with other mega-practices to avoid competing in markets.

Then they used the market power to double and triple what anesthesiologists charged hospitals.

It's not, "Buy and build," it's, "Loot and rent seek."

He goes on to claim:

………

Private equity directly backs the jobs of 12mn workers and has invested in more than 44,000 American businesses since 2017. More than 34mn public servants depend on private equity to support their retirements and, as part of a diversified investment portfolio, private equity consistently delivers the highest returns of any asset class for public pensions.

Highest returns, huh?  Maybe for the PE executives, but in terms of net returns, after the blizzard of deceptive fees?  Not so much.

In fact, every time someone attempts to do an impartial evaluation of private equity returns, the only definitive finding is that PE accounting makes Hollywood accounting look like a bank teller's drawer.

No, PE does not deliver higher returns.  Except for brief periods, it never has, except for the PE executives, who make out bandits on their carried interest tax loophole.

H/t Naked Capitalism.