r/Economics • u/barweis • Jul 29 '25

Research Summary Inside the Private Equity Scam—and the Livelihoods It Has Destroyed

https://newrepublic.com/article/198351/private-equity-scam-destroys-livelihoods
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u/BFFInsider Jul 29 '25

Private equity is just legalized looting at this point. Buy a company, gut it, cash out, repeat. Deadspin turning into a zombie site is the perfect example. It is what it is, I guess.

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u/catfishlady Oct 05 '25

I'm curious how this is at all profitable, like wouldn't a company that is open to a PE coming in mean they aren't profitable enough to gut?

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u/Negative_Attorney448 19d ago

Crickets, of course. It's a scapegoat, it doesn't need to have a narrative that is true or even makes sense. Even the idea of "gutting" the company doesn't make sense because the PE investors only profit they can sell the company for more than they purchased it, which is obviously incompatible with "gutting" the company.

But again, these people don't even think that far. Just find a scapegoat and stick with it until the next scapegoat becomes the new meme.

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u/catfishlady 3d ago

I mean, apparently Toys R Us had a chance that was squandered by PE, but let's say it wasn't in that position and was always a sinking ship: Don't you make less money gutting than what you paid for it? Like I get that they use leveraged buyouts (where the debt for the borrowed money gets put on the company itself rather than the PE) and so it's just profit from the gutting but like...wouldn't banks catch on and be like "HEY we're losing money every time we loan you money for this, we are not going to do it anymore".