* (1) How is a private seller different from a public seller?
* (2) What is the incentive for a private seller to sell, especially in this hospice case where, presumably, the seller cares about the people they employ and serve?
Whereas a public seller has shareholders to pay out, a private seller is simply getting paid to transfer the ownership of their business. In both cases there is a pay out. The amount to be paid out is a large number – the buyer invests only a fraction of the purchase, whereas a bank finances the rest of the transcation. A large payout is enticing to sellers.
A private seller has the incentive of "a large payout" to sell their business. Even in the case where the seller is plausibly ethical and knowledgeable of the outcome of the buyout, their ethics are in contest with the financial incentive. People make personal compromises in exchange for money all of the time.
Lastly, you didn't ask, but I think there is an important part of "how it actually works;" The buyer owes the bank the rest of the transaction. In order to make good on that debt they will need a competent "exit strategy." It seems typical that the buyer will attempt to slash costs up front in order to make a quick, initial gain (e.g., fire employees to avoid paying salaries). After the short-term squeeze realizes gains, the buyer needs to sell off the company to dump the rest of the debt (e.g., spin off some of the business area/assets and sell to yet another buyer at a mark-up; having attractive short-term growth figures probably helps with this part).
* (1) How is a private seller different from a public seller?
* (2) What is the incentive for a private seller to sell, especially in this hospice case where, presumably, the seller cares about the people they employ and serve?
Whereas a public seller has shareholders to pay out, a private seller is simply getting paid to transfer the ownership of their business. In both cases there is a pay out. The amount to be paid out is a large number – the buyer invests only a fraction of the purchase, whereas a bank finances the rest of the transcation. A large payout is enticing to sellers.
A private seller has the incentive of "a large payout" to sell their business. Even in the case where the seller is plausibly ethical and knowledgeable of the outcome of the buyout, their ethics are in contest with the financial incentive. People make personal compromises in exchange for money all of the time.
Lastly, you didn't ask, but I think there is an important part of "how it actually works;" The buyer owes the bank the rest of the transaction. In order to make good on that debt they will need a competent "exit strategy." It seems typical that the buyer will attempt to slash costs up front in order to make a quick, initial gain (e.g., fire employees to avoid paying salaries). After the short-term squeeze realizes gains, the buyer needs to sell off the company to dump the rest of the debt (e.g., spin off some of the business area/assets and sell to yet another buyer at a mark-up; having attractive short-term growth figures probably helps with this part).