> well the person CAN very easily refuse if they care about not selling out to some faceless corporation and fucking their customers, but obviously most of these people dont care about that
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.
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.
Yes, except here I meant that people are being taken advantage of too. Perhaps a better way of putting this is: they found a way to take an important and good principle, and use it against the very people it should be benefiting.
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.
What other word or phrase would describe this situation? Even if you would you prefer "playing the long game", I can see how doing this results in the buyer getting some "advantage" even though at first glance it looks like throwing money away.
For you, it looks like a mutually beneficial transaction between you and the buyer. It is exactly that, in isolation. It screws your customers a little, but all within bounds of fair play. However, while you're playing this game only once, the buyer is playing the iterated variant: they make the same kind of deal with other people, who are just like you.
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.
"Either" implies there are only two parties, the buyer of the business and the seller of the business. The third party, the public who would use the services of the business, is the one being harmed if the buyer of the business also buys all other such businesses in order to create a monopoly.
This can also be done with products — not usually pens, but quite commonly with tickets for events. The buyer and the seller of the tickets can be quite happy, but the person who now owns all the tickets is free to tout them for higher prices to the detriment of the general public who would otherwise have bought them directly for less money.
This is annoying enough when it's just tickets (I'm told, I never go to the kind of events that touts do this at), but we also saw it with random goods during the pandemic.
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.