I'd argue that although publicly-traded businesses do usually go through that cycle (I would say that it's not ALL, but it's certainly MOST, because I can't come up with a counterexample), privately-owned businesses are more likely to avoid it. For example, McMaster-Carr. Privately-owned, with just a few owners rather than a large number of shareholders. And as far as I know (never having been one of their customers myself, just hearing testimonials), they're still just as good at making quality products that their customers want as they were a hundred twenty-five years ago when they got started. No "TAKING PROFITS" stage, and no subsequent decline.
But it does seem like publicly-owned companies go through those stages. It may be shareholder pressure, but part of it also appears to be when they get people in upper management who went to business school to get an MBA, rather than who have been with the company for years. I don't know what makes MBAs so prone to the nonsensensical pursuit of short-term profits that tank the company, rather than the greater (in the long run) long-term profits available by just continuing to make good products that customers want, but it shows up often enough (in many industries) that I'm starting to think of it as "MBA syndrome". And if a company is publicly-traded and run by MBA-style management? Sell your shares now and get out while you still can, is my advice.
Ive found it useful to regard MBAs and the entire pipeline from education to managing companies for MBAs akin to a clergy class.
They spend so much time and effort learning the scripture and then are praised as having some sort of intimate knowledge of business practices and working towards the ever growing prophet (read: profit).
Their forecasts akin to divination (but with charts and graphs, oh my!)
In this context, it's helped me understand, or at least create a useful caricature of what must be going on in those spaces where everyone drinks the kool aid of "there is only the next quarter".
But it does seem like publicly-owned companies go through those stages. It may be shareholder pressure, but part of it also appears to be when they get people in upper management who went to business school to get an MBA, rather than who have been with the company for years. I don't know what makes MBAs so prone to the nonsensensical pursuit of short-term profits that tank the company, rather than the greater (in the long run) long-term profits available by just continuing to make good products that customers want, but it shows up often enough (in many industries) that I'm starting to think of it as "MBA syndrome". And if a company is publicly-traded and run by MBA-style management? Sell your shares now and get out while you still can, is my advice.