Private equity firms eyeing Yahoo | Marketplace From American Public Media.
What happens when a private equity firm buys up a publicly held company?
Among other things, it concentrates the wealth in a smaller portion of our society.
Publicly held stock is held by about half (51.9%) of American households. Business equity, the value of privately held businesses is held by 12.0% of American households. [Source: 2007 SCF, categories EQUITY and BUS.]
EQUITY held by households totaled $13,695 billion in 2007. BUS held by households totaled $14,894 billion.
Assuming that the distribution of Yahoo stock matched that of EQUITY overall, the distribution of Yahoo's stock would be as follows:
Top 1%: 36.0%
Next 4%: 30.5% Top 5%: 66.5%
Next 5%: 12.4% Top 10%: 78.9%
Next 40%: 19.6% Top 50%: 98.5%
BUS -- privately held businesses, including "small business" and private equity -- was distributed as follows:
Top 1%: 62.7%
Next 4%: 25.5% Top 5%: 88.2%
Next 5%: 5.5% Top 10%: 93.7%
Next 40%: 6.0% Top 50%: 99.6%
It would appear that the bulk of the ownership is moving from the top, say, 5% to the top 1%.
The top 1% of the wealth distribution, according to the 2007 Survey of Consumer Finances, held 33.8% of the Net Worth. That same group had received a mere 16.4% of the income in the preceding year. According to Piketty and Saez, the top 1% of the income spectrum received 23.5% of the income in 2007 (including capital gains; table A3).
The people in the top of the top 1% have a lot of power to get laws written that favor their interests. Privately held companies represent far more of the holdings of the top 1% than does equity in publicly held corporations (by a factor of 1.9, according to the SCF -- $9.4 trillion in BUS vs $4.9 trillion in EQUITY).
These are many of what are known as "small" businesses. Far more like "Wall Street" than "Main Street."
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