Lenin offers this simple, straighforward explanation of how private equity trusts investors receive a guaranteed return (profit). Why else would they invest?
Consider a 40 bed care home, in a working class area ie with no private paying residents.
The home takes in £1 million a year from the government.
From that, if owned by a private equity group such as Four Seasons, £200 thousand goes to the management fee.
£100 thousand goes to the investors.
£100 thousand goes to the bank.
Therefore, only £600 thousand remains.
Staff wages account for 60% of this.
Therefore, £240 thousand remains. Half is for fixed costs such as food or electricity.
The rest 12% is sheer profit.
Consider however, this is if the home is full. The average occupancy for care homes is 82%.
We are not told the true cost of care.
Businesses are like pigs in a trough.
The government dish out the swill.
Care costs largely cover debt or profit Lenin Nightingale 2015
These links are relevant;