Quote:
Originally Posted by Adder
Regarding who owns everything when this is done, it's a bit strange to me that Warren and AOC are proposing a ban on all HSR-reportable mergers in an effort to keep PE from buying up industries and "protect small businesses" who will be struggling.
Selling to PE means the owners get at least some cash for their assets and the opportunity to do further business in the future. Not selling to PE means liquidating the assets, which will be acquired out of liquidation by PE or other financial buyers, and being left with nothing. Doesn't sound like much protection.
Of course, the proposal isn't going to go anywhere anyway.
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PE consolidates. That means, yes, the owner gets to survive. Many of the workers do not. I think AOC and Warren actually trying to protect small business workforces more than small businesses themselves.
I'd hobble PE differently. I might prevent them from doing rollups by creating a reverse windfall tax. Pass a tax treating the discount at which the PE firm is acquiring the small business versus the value of the small business (defined as average yearly revenue of business for past five years X 3) just prior to the Covid crisis (March 20, 2020) as income to the firm, taxed at 20-80%, progressively increasing with size of discount. This would force the PE firm to pay enhanced value to owner.
Couple that with a tax credit to PE for every employee the PE firm retains on the books of any purchased company for 3 years following purchase.
