Taking private. Something that used to be public (in this case, the term usually refers to something that was run by the government), which is now bought out by investors and taken private. No more government knuckleheads running the show. No more arrogance about wasting tax payers' (or at least other people's) money. And as a private company, the entity can find a compensation system to attract the best and brightest talent to come work for it.
The system has happened in different methods over history in the U.S. and around the world. Airlines were privately run...then they did stupid things and went bankrupt. The U.S. government essentially bought many of them (or funded them back into existence). It regulated them, paid attention to the lousy service they were giving customers, and allowed unions to dominate in a very non-SouthWestian way. (Southwest is famously essentially owned, or was at least funded, by its own union, and the CEO was a union man from the womb...yet Southwest doesn't suffer the same typical "you can't fire me so I really don't care about the quality of service I'm giving you" vibe that most unions broadcast, especially at competitive airlines. The founder simply fired bad workers. What a concept, right? Yeah, we can't really do that anymore.)
Anyway, the government, with no culpability for costs, would allow the hiring of 17 workers to do the job of 7, and ran the airlines very inefficiently. It then suffered enough financial hemmoraging, sold them to private investors and, well, the airline industry today is a reflection of that structure. It is run just well enough to pay interest to bondholders on the debts the airlines carry as private companies. And their stocks look about like a dead man's pulse, albeit with defibrillators every now and then when the economy changes suddenly.
The process? Well, the gov calls out a shout for bids. Investment banks advise private equity shops on what they should spend for what. And then sales happen. New management is brought in. Massive firings usually happen. Big tech upgrades replace more people. And instead of 38,000 employees in a company losing $50 million a month, the company skinnies up to be 14,000 employees in a company making $20 million a month, with a lot more profits to come down the line.
Yeah, Darwin should be alive today to frame things for us.
Related or Semi-related Video
Finance: What is a Private Investment Co...3 Views
Finance a la shmoop what is a private investment company Shh we are hunting [Elmer Fudd appears from a bush]
profits okay people it's private yes private private means not subject to
the onerous rules of public investing and all that regulation that is when [Definition of a private investment company]
it's only wealthy big boys and girls putting in their dough the presumption [Wealthy people giving money to the market]
is that they have their own lawyers their own risk tolerances their own Ivy
League education and they can figure out the deal on their very own they don't
need mama government training wheels the way the public does in public offerings [The public riding a bike as the stabilisers are taken off]
with publicly traded securities and so on like private wealthy educated
investors get treated differently than Jo farmer who you know just graduated [Guy talking as Elmer Fudd keeps appearing in the background]
high school so who all does this apply to like what's a private investor what
investment vehicles are involved well hedge funds you know those go to private
wealthy investors private equity funds same deal and venture capital funds same
deal why because they go bankrupt all the time you can lose all your money in [Money going down the toilet]
these things all the time and it happens and Joe Q public needs to be protected
from that and there's good and bad because in these funds also you can make [The government saves the public from a fire breathing dragon]
like a hundred times your money if you happen to win the one lottery ticket [Guy next to pile of money from Amazon stock]
that goes up a whole lot and that's what people focus on when they sell them so
Joe Q public at least according to government is to be protected from such
a volatility and there's other investment vehicles beyond these three
that get private attention away from the public but they have vehicles we can't [Elmer Fudd whispering]
tell you about
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