My concern over private equity

[mime]

Anyone else think that private equity could cause the next stock market crash? It only takes one of these highly geared buy outs to fall through and investor confidence will get shattered.

p.s crash is not inevitable

 

[numbercruncher]

Some would argue its happening as we speak

 

[dhukka]

Anyone else think that private equity could cause the next stock market crash? It only takes one of these highly geared buy outs to fall through and investor confidence will get shattered.

p.s crash is not inevitable

The LBO put that has driven the US markets higher over the last 6 months has all but shut down. That's not to say some of the deals in the pipeline won't go through but they will need be renegotiated on more favourable terms for investors.

 

[gfresh]

Anyone else think that private equity could cause the next stock market crash?

Wouldn't surprise me..

It's a very complex system, however I would think that if the market is heavily leveraged, when the stocks they have leveraged into also drop my massive amounts - this only exasserbates the problem. With most of the major international markets seeing a fallout because they are so closely linked, there is no 'safe haven'. Already I can see stocks which large funds (such as JP Morgan) have invested into just recently - are worth now 30% less than they were 3 weeks ago, and that's just one stock here in Australia, when they invest all over the world.

There must be a buffer, but when is breaking point? That is the trillion dollar question..

 

[Trembling Hand]

Anyone else think that private equity could cause the next stock market crash? It only takes one of these highly geared buy outs to fall through and investor confidence will get shattered.

p.s crash is not inevitable

Maybe not a crash just a healthy repricing of stocks value.

 

[brettc4]

Well as someone who have just lost his job because of Private Equity trying to reduce expenses quickly to on-sell the company, I don't have any sympathy for them whatsoever.

To me the issue is this: A number of very wealthy people trying to make themselves even more wealthy in very short time frames.
Buy a company.
Get rid of as many expenses as possible in the quickest amount of time, a hope to still bring in revenue before your customers realise you have just gutted a well established company.
Sell the company to an unsuspecting buyer who seels the final number and the number of customers and this it's a good deal until 3 months down the track the wheels fall off because the Private Equity people got rid of the best resources in the company.

Me Bitter, well maybe a little, but I think what I say stands true.

I have no problem with LBO when it is management or another listed company as their long term goals are very different from your run of the mill Private Equity pirate.

Brett

 

[mime]

Sucks how you lost your job. Chin up there is plenty of work out there.

 

[numbercruncher]

Become a Plumber, i read yesterday they are demanding 1500 a day to get out of bed ......... Go imagine turn up at some old ladys house whos retired on her 1980s money, tighten the tap and say thatll be 300 thanks (while keeping a straight face) ......


What a world huh ... sorry to hear you lost your job, dont worry Karma will get those pointy nosed scamsters for yah some day!

 

[gfresh]

Problem with plumbers, is they won't be getting out of bed for $1500 a day when those that used to have jobs don't have any money to fix their taps..