An example: a laundromat makes 100,000/year after paying its operating costs. It’s worth something like 300-500k. You settle on 400k. You take 300k debt and 100k equity. You also put 50k into capital for the business, fix it up. The business pays back debt 80k/year for five years. You keep 20k.
Of course, and generally more as a percentage of purchase price than larger deals, as banks lend on the basis of earnings, he pays smaller earnings multiples.
Debt is how any small business changes hands. We need ways for companies to change hands, otherwise they just close.
Fine, but let them put something else at risk/collateral. The leveraged buy-out is a self-licking ice-cream cone of the heads-I-win-tails-you-lose variety.
Getting such a loan for a _distressed_ business is far worse - absurd on its face, essentially fraud.
I’m not concerned about the winnings. I’m concerned about the destruction wrought.
Until they make a business nonviable, taxes are just a cost of doing business. Like dead kids or a ruined climate system.
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Debt is how any small business changes hands. We need ways for companies to change hands, otherwise they just close.
What we need to do is tax these earnings sensibly, eliminate carry, for example. Break up big players.
Getting such a loan for a _distressed_ business is far worse - absurd on its face, essentially fraud.
The whole incentive structure stinks
Until they make a business nonviable, taxes are just a cost of doing business. Like dead kids or a ruined climate system.
You could do that, but it would reduce living standards and jack up unemployment. Worth looking up WHY society developed the corporate veil.
See also Exxon and climate change, or the coal companies who have managed to separate their pension and medical obligations from their assets.