What if the private equity boom of the past year and a half led to an underestimated amount of unsubstantiated investment/leveraged financings that, into the next couple years, will lead to a mass number of defaults similar to the subprime mortgage crisis?

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Go to sleep, my child.

likefunny

Hahah

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Sounds like lots of downside work for us. WIN/WIN, Amirite????

likefunnyuplifting

Are you suggesting PE could make bad investments based on little real diligence? No way…. In other news, water is wet.

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Like how much diligence do investment banks even do on the finance side ? How much do attorneys even do when there are 4 deals going that all want to close in like 3 weeks ?

likefunny

Firms should REALLY make corporate folks work on at least a couple lawsuits stemming from the type of transactions they work on

The short answer is that due to capital requirements on banks decreasing their exposure to bad investments and the advent of private lenders who arent systematically important, a rush of defaults in the LBO space probably would minimally impact the broader economy. Sorry if that's a downer for folks' guilt fantasies.

likeuplifting

Thanks this makes sense

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Then at least I’ll have paid off my student loans this time 🤷🏼‍♀️

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What do you mean "unsubstantiated"? The companies are frauds? The valuations were frothy?

Most PE backed businesses were businesses before the PE firm invested. It's unlikely they're frauds. Also, PE lending isn't as systemic an issue as the RMBS crisis.

Please do not violate privilege on this platform 🤣😅🤣

Luckily I’m not in private equity haha

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