[regera]

Dollar stores are private equity with a checkout lane.

In 2025, Dollar Tree sold Family Dollar to a group of private-equity firms: Brigade Capital Management, Macellum Capital Management and Arkhouse Management Co.

https://corporate.dollartree.com/news-media/press-releases/d...

It’s a business model cosplaying as poverty relief while quietly siphoning money from the people least able to lose it. They already run on a thin-staff, high-volume model. That 23% increase is not a glitch. They know their customers can’t drive across town to complain. They know the regulators won’t scale fines to revenue.

[sema4hacker]

Has private equity ever done anything good for anyone outside of the investors?

[WarOnPrivacy]

> Has private equity ever done anything good for anyone outside of the investors?

If it's not publicly traded, it's super secure from any public accountability.

And while I'm increasingly hostile toward the shareholder model, we do get one transparency breadcrumb from this (gov managed) contrivance: The Earnings Call

Earnings Calls give us worthwhile amounts of internal information that we'd never get otherwise - info that often conflicts with public statements and reports to govs.

Like CapEx expenditures/forecast and the actual reasons that certain segments over/underperform. It's a solid way to catch corporations issuing bald-faced lies (for any press, public, gov that are paying attention).

    AT&T PR: Net Neutrality is tanking our infra investment
    ATT's EC: CapEx is high and that will continue

I'll bet 1 share that there are moves to get this admin to do away with the requirement.

[gruez]

I'm not sure why private equity is singled out here, when every time a public company does a bad (eg. Boeing), people crow about how public companies only care about juicing next quarter's earnings.

[JumpCrisscross]

> Has private equity ever done anything good for anyone outside of the investors?

Yes. Productivity typically goes up [1]. Its reputation for job cutting is overblown [2], as is its record on price increases [3]. And historically, it's tended to decrease concentration in the industries it operates in. (The conglomerate break-ups of the 1980s were fuelled by new entrants and carve-outs.)

Instead, what I think we have is a category error. Berkshire Hathaway is a private equity shop as is all venture capital [4], and most family businesses of any scale are structured identically to sponsor-owned firms. Meanwhile, LBOs have been unable to shake the private-equity label for decades, unless they're lead by a founder, in which case they're "take private" transactions. In essence, we brand failed alternative asset strategies as private equity ex post facto.

Moreover, transaction size is negatively correlated with returns, particularly for leveraged buyouts. So the biggest private equity deals, which represent a minority of transaction activity, are disproportionately (a) bad and (b) public.

Finally, we get a lot of false conflation of market failures to private equity per se. Private-equity owned hospitals are bad [5]. But I haven't seen great evidence they're worse than other privately-owned hospitals with similar scale. The problem is hospitals probably shouldn't be run for profit or on-locally. But because nobody in particular is defending private equity, that's easier to attack.

[1] https://www.hbs.edu/faculty/Pages/item.aspx?num=67233

[2] https://www.jstor.org/stable/43495362

[3] https://centers.tuck.dartmouth.edu/uploads/cpee/files/Is_Pri...

[4] https://en.wikipedia.org/wiki/Early_history_of_private_equit...

[5] https://jamanetwork.com/journals/jama/fullarticle/2813379#go...

[epolanski]

Private equity has rarely done good for investors too.

With the boom of popularity of ETFs in the last decades it has been increasingly hard for active fund managers to justify their costs by investing on public markets where benchmarks are visible and public.

Thus they removed themselves from the benchmark entirely and moved to private equity where there's no benchmark and returns are very hard to gauge.

Analysis shows that:

- The overwhelming majority of PEs lose money.

- Annualized return of PE in UK has been 2.1%, this doesn't even match parking money in short-term bonds.

- PE performance is extremely murky, as their gains are virtual and whether you exit profitably is heavily dependent on your timing

- The entire sector is ripe with corruption and little regulatory oversight. PEs keep ballooning their holdings valuations by essentially trading companies among themselves. So fund A sells Acme to to fund B at twice the valuation, and will return the favour by buying Foobar at inflated valuation. This all obviously requires access to cheap credit. Many startups are approached by PEs that have already lined up to sell the startup to another PE after few years guaranteeing everybody (from founders to all the PE managers) nice profits, up to the last sucker stuck with the bill.

The only ones that have profited out of PE, beyond the managers working there, are those that invested in the PE itself, meaning buying shares of the fund itself.

[adolph]

> Has private equity ever done anything good for anyone outside of the investors?

This is a bit like asking if public equity has ever done anything good for anyone outside of its investors. It really depends on what is meant by "anything good."

Has any company that has taken venture capital (a variety of private equity) ever done anything good for anyone outside the VCs?

Private equity is more often associated with late stage takeovers and reorganizations than with startups, however. An example might be the privatization and refocus of Dell. Was a refreshed Dell good for its workforce and customers?

https://www.wallstreetoasis.com/forum/private-equity/the-lea...

[tpmoney]

If you're a Dell customer, Michael Dell taking the company private again seems to have done wonders for them.

[holysoles]

In general I have a pretty negative view of private equity. However I did see this awhile back that seems at least partially positive: https://www.cnbc.com/2023/07/27/private-equity-giant-kkrs-an...

[pembrook]

I assume you're asking this rhetorically and just want people to affirm how 'evil' private equity is to support the narrative-driven belief you already have?

PE became a favorite journalist boogeyman in the 80s for saddling companies with high interest debt they could never repay or slicing up industrial companies and selling for parts. That's not reality today. A vast majority of private equity buyouts nobody ever hears about or cares about because everything turns out totally fine.

A private equity buyout that makes the company worse off, destroys customer trust, kills employee loyalty, and leaves room for competitors to swoop in is a failed private equity buyout. If that were true in the majority of cases the entire PE model wouldn't work at all.

Here's just a few success stories of companies you've heard of (there's thousands you haven't heard of, so no point in bringing them up).

- Hilton Hotels - Dunkin Brands - Beats by Dre - Dominos Pizza - Petsmart / Chewy

Businesses that sell to private equity are often businesses that are not doing well or are not long-term sustainable, hence why the owner wants to sell. Think about it logically. If you're running a fantastic business that is profitable, growing, sustainable, with happy employees -- why would you sell?? Or in the case of public companies being taken private, why would anybody take the risk if everything is going wonderfully?

[xhkkffbf]

Why is private equity different from any other form of organization? Publicly traded companies are even more addicted to getting revenue. Non-profits like universities may not have shareholders, but somehow the price of tuition keeps skyrocketing even faster than the prices at the dollar stores. And it's not like the religious charities have been pure.

[bawolff]

In theory it helps people who have some sort of trade and just want to do that trade, focus on that, while the business experts from the PE firm handle the business side. Running a business is a skill, and people who want to sell some other skill often don't have it as you can't be good at everything.

Are there other ways of addressing that gap, like hiring experts? Sure, but its not like PE is entirely evil.

Keep in mind there is some selection bias here. You only hear about private equity when its being comic book evil. When things work out or its a non scummy PE company, you never hear about it.

[jimmydddd]

It seems to offer interesting opportunities for young recent high level MBA's.

[bloppe]

If you have a pension, you're an investor in PE. If you live in a country with a sovereign wealth fund, you're a beneficiary of PE. If you're connected to a school with an endowment, a lot of that money ends up in PE funds, and can fund lots of research and student resources.

So ya, I'd agree the PE is rarely good for anyone but the investors, but you'd be surprised how many people are investors without realizing it.

[blitzar]

vc, private equity; potayto, potahto

[gadders]

I can't think of a single example. It normally means making a company worse whilst relying on existing name recognition to drive sales with the aim of re-selling it before people realise how bad the company has begun.

[eagleinparadise]

So I work in commercial real estate, obviously a large private equity influenced industry. I've worked in REPE and in other capacities.

There's degrees of PE. Some good, fine, and some worse.

Take real estate development. It's probably one of the suckiest businesses to be in. I know 3 developers who have committed suicide because when things go wrong, your entire life collapses (you put up all your assets in order to obtain construction loans). The litigation, brain damage, and risks are enormous. Increasingly, the payoff is awful (due to worsening legislation and NIMBYism and worse market condiditions)

However, private equity in development I think is a good thing. When there are investors willing to put this money at risk, we get much needed construction of housing (see Austin, TX where rents are falling off a cliff due to over building).

Now look at Los Angeles, which new permits are literally almost non-existent because LA is one of the most hostile places for developers. You can't make money in LA, so there's no capital available.

Then you end up with "affordable" housing developers adding the only supply at $600-900k/unit costs vs the market rate developer at $300-600k/unit.

----

On the other hand, "value add" private equity is much more suspicious. It's more cut throat, easier to end up in crony capitalist situations by operating with a "cut expenses, provide less, make big bucks" model. The people in this world are the kind of guys who have never done anything hard with their hands other than gotten a sore thumb from pounding too hard on their keyboards to adjust their excel model ("Mr. The Model is Always Right") too hard all night long.

This is how we end up with old properties who get flipped 4x each being sold with "upside the seller was too stupid to take advantage of" and ending up in situations where tenants get priced out due to private equity seeking infinite growing returns. Oh and by the way, every previous owner did "lipstick on the pig" jobs because why not try to save costs and make your levered IRR 16% instead of 12%? You cannot show that kind of return when you promised 18%... then it'll make it harder to fundraise your next deal!

This isn't to say that "value add" is a dirty business. We certainly need to balance the incentive to modernize and renovate properties. An d developers overbuilding isn't always a good thing.

So its nuanced. I think people need to fairly give credit that there are both good and bad. The capital efficiency is real and produces real world outcomes since there is a strong financial incentive at the end of the door.

But financial incentives sometimes bump up to issues causing harm in real life, which need to be recognized and called out.

[regera]

Not yet. Sometimes employees if they get second bite of the big apple. PE do well in capital-intensive sectors. I'm not sure if their playbook fits the real needs of dollar stores. Instead of focusing on things like debt and aggressive cost cuts, most customers just want fair prices, stocked shelves, clean stores, friendly cashiers and basic respect—things that PE firms often ignore. In DFW, I was surprised to see 1-2 person dollar stores!

[jahsome]

To me, that is an utterly hilarious question to be posing on this website of all places.

[satvikpendem]

Valve is private equity and seems to do a lot of good things, for gamers and for Linux users in general.

[dehrmann]

> Dollar stores are private equity with a checkout lane.

Dollar Tree and Dollar General are publicly traded.

So Family Dollar might be the result of PE tactics, but the other two aren't, and Dollar Tree sold Family Dollar because they saw it as under-performing.

It's actually sort of weird Dollar Tree couldn't make it work. I know the dollar stores all have somewhat different businesses, but you'd think that Dollar Tree could have either turned Family Dollar around or knew it was selling a loser (see the market for lemons) to PE.

[thanhhaimai]

And this is exactly why I only shop at Costco. While other retailers try to get me to buy more stuffs, Costco try to make sure I'm satisfied enough that I'll renew my yearly membership (their main profit source). The incentive structure aligns very well.

[Waterluvian]

Buying in bulk is about having the ability to both afford next week’s food this week and have the means to store it. Not to mention the annual subscription.

Responding to a comment about dollar stores preying on the poor with, “that’s why I shop at Costco” is… a choice.

[gruez]

>While other retailers try to get me to buy more stuffs, Costco try to make sure I'm satisfied enough that I'll renew my yearly membership (their main profit source). The incentive structure aligns very well.

This doesn't make any sense. Costco makes a profit on the goods sold as well. They have every incentive to sell you as much stuff as possible. That's why they also engage in the usual retail tactics to increase sales, like having the essentials all the way in the back of the store, and putting the high margin items (electronics and jewelry) in the front. They might practice a more cuddlier form of capitalism than dollar general, but they're still a for profit retail business.

[jmspring]

The sad thing is, people in rural areas that depend on places like Dollar General, and are getting fleeced blame everyone but republicans and they are usually in red areas

[antonymoose]

I’ll bite…

I live in a rural area with a Dollar General about a half mile from my neighborhood. For staples, it’s honestly fine. You want a 6 pack and some hot dog buns because you missed it in the Wal-Mart run the other day (15 miles away), it’s great!

You’re not getting fleeced and if you are, the gas savings alone more than make up for it (0.65 per mile per the IRS.)

For folks who depend on the local DG for, idk, clothes and household goods it might be much worse, I don’t shop for those there ever, but on staples it’ll do, especially given the density of stores compared to major chains.

[lotsofpulp]

> They already run on a thin-staff, high-volume model.

Like every other retail business not targeting the top 5%.

And Dollar Tree and Dollar General are both publicly listed companies, not private equity.

Dollar Tree sold Family Dollar for $1B 10 years after buying it for $8.5B, a pretty big loss. Dollar Tree’s market cap is $25B, so a pretty negligible part of the national dollar store business is “private equity”.

[whynotmaybe]

Costco

[JKCalhoun]

Here's how shitty of a business person I am: I had no idea that the poor were a "market" you could prey upon.

Somehow I thought that if I presented a business plan that began, "Our target audience are those living paycheck to paycheck…" that I would be quickly shown the door.

[thephyber]

Dollar Tree and Dollar General are sometimes located in the poor part of a city, but most of their locations are in areas which are too poor to sustain good margin businesses. Rural towns with a single road and only 1-2 gas stations, etc. their core business is to offer smaller and smaller portions to maintain profits while rival stores go under. They are so prolific, they can get giant companies (think drinks, household items, and pharma) to create smaller and smaller portioned SKUs over time.

The businesses were originally just exploiting a gap in the market, but then PE realized that they could just buy out these local monopolies.

[toomuchtodo]

It’s an industry worth tens of billions of dollars in the aggregate unfortunately.

[cwmoore]

Paid For By Poor Folks (PFBPF)

[veunes]

When the goal isn't to run a good store but to extract value as fast as possible, all the classic PE patterns show up

[EnPissant]

Then why doesn't some other established brand open in the same area and undercut them?

[antonvs]

> cosplaying as poverty relief

Does it really? Who says this, and who believes it?

[WarOnPrivacy]

>> cosplaying as poverty relief

> Does it really? Who says this

(search engine: 22 relevant results in 0.85s.)

    we’re here to provide affordable and convenient access to name brands,
    DG’s private brands, nutritious foods, household essentials and more.

ref: https://www.dollargeneral.com/hereforwhatmatters

[array_key_first]

I mean, it's in the name.

[expedition32]

Interesting. The Netherlands is no class society so rich or poor nobody has any goddamn shame to stand in line at the Action checkout if there's a good sale to be had.

Seeing people in BMWs at the Aldi parking lot. Strange country.

[sgerenser]

I do most of my grocery shopping at Aldi (in the US). There’s plenty of Teslas, BMWs and Mercedes in the parking lot (although late model Hondas, Toyotas and Kias are probably the most prevalent). Turns out people of all income brackets like saving money.

[antonvs]

> The Netherlands is no class society

Americans used to claim this too. It’s invariably false. It just means that the wealthiest people do a better job of concealing, or not advertising, how vast the wealth discrepancy between them and the average person is.

> Seeing people in BMWs at the Aldi parking lot

The least wealthy person on the list at https://en.wikipedia.org/wiki/List_of_Dutch_by_net_worth could afford 10,000 high-end BMWs and still be extremely wealthy, far too wealthy to have any interest in lining up at Aldi’s for a sale.

[agumonkey]

Makes me wonder if the right way to help lower classes is to give them some space (association, platform) to meet and solve issues on their own terms so nobody tries to leech from them.

[raydev]

Family Dollar isn't a dollar store though.

[reenorap]

Private equity is even more insidious than you can imagine.

How it works is that PE will buy a profitable company, and then strip out everything it can, and then load on the debt. In exchange for loading on the debt, the banks will give preferential treatment to the other companies in the PE fund's portfolio. <----- This is the part everyone misses.

In addition, they will force the company to purchase services and even entire companies from the PE company's fund portfolio. <----- This is the part everyone misses.

Then, after a year or so, PE will IPO the company and sell to retail suckers. Mutual fund companies will hold their nose and buy into the IPO even though everyone knows it's a shitty company. The reason why is because the PE company will give early access to investment in their other more promising companies. <---------- This is the part everyone misses.

So PE companies will make a lot of money by stripping every part of the company out, maximizing and leveraging its portfolio of other companies so that banks and mutual fund companies will dump money into them. It's literally like harvesting a farm animal and carving absolutely everything of value off of it, as well as leveraging other companies to dump into it with the promise of access to other companies in its portfolio.

And then they turn around and dump the carcass into the hands of retail suckers, either through their mutual funds like Fidelity or straight onto the markets.

[sergiotapia]

private equity is a tumor on this country. it seems any business stained with this actively becomes worse for the customer for as long as possible.

[calmbonsai]

Kudos! This is beautifully succinct, elegant, and accurate writing.