Rewind: How private equity kills companies and communities

Key takeaways

Private equity significantly impacts industries like healthcare, media, retail, and housing, often to the detriment of communities and consumers.
Financialization in private equity leads to a disconnect between the generation of profit and the actual success or quality of the business.
Personal narratives from individuals affected by private equity provide critical insight into the operational and cultural changes brought about by financialization.
Community activism and new business models are rising as potential responses to the challenges posed by private equity.

Summary

The Impact of Private Equity on Industries

Megan Greenwell discusses her book 'Bad Company', focusing on how private equity (PE) influences various industries including healthcare, media, retail, and housing. She explains that private equity's model often disrupts business practices for short-term gains, leading to negative consequences for communities and consumers. Greenwell emphasizes that private equity does not just affect failing businesses but transforms entire sectors in ways that can lead to community degradation and dissatisfaction.

The Disconnect Between Financialization and Real Value

The conversation delves into the financialization that private equity introduces, wherein profit generation is detached from genuine business success. Megan explains that while venture capital aims to grow companies from the ground up, private equity firms often prioritize quick returns at the expense of sustainable growth, which results in reduced service quality and employee autonomy.

Personal Experiences from Journalism to Realities of PE

Greenwell shares her personal experiences as an editor at Deadspin, which was taken over by a private equity firm, illustrating the struggle between editorial integrity and financial demands. This personal narrative reflects the broader theme of how private equity influences company culture and operational decision-making, often leading to contentious environments.

Community Responses and Potential Resistance to PE

The podcast concludes by discussing how various actors are beginning to push back against the negative impacts of private equity. With grassroots organizations, proposed regulations, and innovative local media models emerging, there's a glimmer of hope for reform and community resilience against the forces of financialization.

Show notes

Hey everyone, it’s Nilay. We’re settling back in here after the winter break and CES, and we’ll have new episodes for you starting next Monday. In the meantime, we wanted to highlight one of our favorites from last year: an interview with journalist and author Megan Greenwell about her book Bad Company: Private Equity and the Death of the American Dream.

My conversation with Megan last year was extremely illuminating as to why private equity does what it does to industries like healthcare, media and real estate — and just how deeply it's affecting the everyday lives of Americans everywhere. It's a really great conversation that feels just as timely today as it did last summer. Enjoy.

Links:

Bad Company | HarperCollins

How private equity kills companies and communities | Decoder

Private equity bought out your doctor and bankrupted Toys ‘R’ Us | Decoder

Private equity makes its first college sports play | Axios

Private equity Is gutting America — and getting away with it | NYT

I was fired from Deadspin for refusing to ‘stick to sports’ | NYT

Will private equity be the next ‘Big Short’? | Marketplace

The profit-obsessed monster destroying American ERs | Vox

Why your vet bill is so high | The Atlantic

The investment firms leave behind a barren wasteland’ | Politico

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Credits:

Decoder is a production of The Verge and part of the Vox Media Podcast Network.

Decoder is produced by Kate Cox and Nick Statt and edited by Ursa Wright. Our editorial director is Kevin McShane.

The Decoder music is by Breakmaster Cylinder.
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