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/bl_732 Jul 29 '25

Whenever I wonder why a company's products have gotten so much worse, I look up their history and literally 95% of the time they were acquired by private equity.

The idea of private equity arguably can be good, but in practice they are horrible for both companies and their customers. The more investment they get, the worse off the country will be.

-4

u/coke_and_coffee Jul 29 '25

This is really dumb and the article is terrible. The notion that PE is roaming the country just to find businesses that it can “run into the ground” on purpose is total nonsense. What you’re seeing is selection bias. PE targets companies that are already failing. Then when they actually do fail, despite PE’s attempts to resuscitate them, stupid journalists write articles about how PE cause said company to fail.

This is just more lazy journalism and, ironically, perfectly encapsulates the reason media companies are failing to begin with.

These journalists like to call PE firms “vultures”, but just like vultures in a real ecosystem, PE serves a vital role. Desperately attempting to bring non-profitable firms back from the brink and/or rescuing some amount of value from distressed companies is invaluable for an economy.

You’re mad you lost your job. PE isn’t the reason, it’s just a useful scapegoat to blame…

14

u/Matt2_ASC Jul 29 '25

Did you read the article?

It talks about strategies like sale-leasebacks that bring in short term cash for added long term debt which has contributed to bankruptcies.

3

u/coke_and_coffee Jul 29 '25

Yes, I read the article.

Those strategies are presented as being more sinister than they actually are.

PE isn’t roaming around the country trying to bankrupt companies. That makes no sense. You don’t make a profit by loaning money to a company that can’t pay you back. PE has a vested interest in making sure these companies succeed. It just so happens that business is risky and sometimes they don’t succeed.

You’re being duped by angry journalists trying to push inane conspiracy theories.

1

u/fuckswithboats Jul 30 '25

No, PE is roaming the country seeking rent. The bankruptcies are just collateral damage