Molson Hart

I've never really understood the criticism of PE firms that do this. Investors putting up $5B+ are big boys, they can demand any covenants they want and refuse to invest otherwise (which does happen - see wework) Why second guess structure of deals?

If you own a company you can do anything you want with it financially, subject only to restraints from creditors. If the creditors aren't complaining why complain on their behalf?

It could be argued that the laws that allow this are destructive to society in the form of unnecessary job loss. I would also say it sets a terrible example. These guys make A LOT OF MONEY. Should our best and brightest be doing this instead of engineering, computer sci, etc.?

Why does this apply to PE specific shenanigans? VC tends not to involve debt yet still leads to rich people and job turnover.

If job loss is the issue, if you're claiming companies undervalue job permanence, that's a standard externality which can be addressed by, say, higher taxes on new employees that goes down over time. If making lots of money is an issue, raise the marginal tax rates. Why PE?

We do recognize that employees are to some extent creditors, and require employers to fund pension insurance. But that's not the point being made when you complain about a PE company screwing over creditors (or having the theoretical ability to, as above.)

VC is about the creation of something new. PE is supposed to be about taking something old and making it better but oftentimes seems to be less of that and more about financial engineering over value creation.