alt Hacker NewsMake it a leverage limit. Otherwise you’ll have other players come in and replicate the playbook.
The short-term fix is banning PE. The long-term one is restricting the leverage these groups can take. Then put limits on upstream leverage. We have these across our economy. We just don’t apply them to this sector.
This is the right response.
Most state bar associations require a lawyer (or group of them) to own law firms. That _doesnt_ prevent law firms from doing crazy deals to gain liquidity for their partners, including from private equity.
Dictating who has to “own” something just incentivizes people to separate ownership from financial benefit. In most cases that’s just plain worse than letting real ownership happen.
If there is a business practice you don’t like, regulate the practice, not the corporate structure.