-
the route to growth is moving money from business X to Google/Facebook
could you explain this a bit? interested in what you are getting at.
I agree that many investments seem to be based on the "bigger fool" theory, and the likes of Vision Fund have kept this moving along nicely, so far at least.
ChasnotRobert-
Sure. I'm saying that huge amounts of new private equity money (50%+) ends up going to Facebook and Google for advertising to grow the business through customer acquisition. But acquisition costs have been steadily rising for years as consumers mature and become desensitised to advertising. This creates an unsustainable situation for businesses and this means they need to raise larger and more frequently, and from my limited experience the bottom has properly fallen out of that market.
deleted
I think private equity is set to be the next global horror story. The entire industry is built on the predication that there will be a bigger PE fund to come exit you or an IPO. Both options are getting rarer and rarer.
Their investments are all in high risk and high growth businesses where the route to growth is moving money from business X to Google/Facebook. I think it's something like 53% of all PE money ends up there.
Fine in theory, let them lose it, but when you follow the money back up the chain it gets a bit murky. There are too many people with too much skin in the game for these things to not continue to proliferate and collapse, but I have a feeling it will.
PE is basically operating the entire lower runs of business investment and taking these away will be problematic. It'll spread quickly up the chain IMO.