Private equity

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How it works

How the practice works.

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Private equity firms such as Blackstone invest money into businesses and real estate that are either filing for bankruptcy or close to. This gives the private equity firm major leverage over management decisions, such as cost cutting measures and pricing. This in return can help the firm sell the company to another firm or entity for more money in the short term until the company is no longer viable in the long term, similarly to hot potato.

Why it is a problem

Private equity firms are often known for degrading the quality of a product or service for the customer in order to extract the most amount from their investment in a company. Businesses that close at the hands of private equity management also affect the employees, such as for Toys R' Us, Kmart, and Sears.^[1] In short, they take more than they give to a company, while prioritizing investor profits over community benefits.^[2]

Examples

Some examples of Private equity include:

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Lucky Strike - replacing free-fall pinsetters with nylon string machines that affect gameplay.^[3]

References

↑ Blasdel, Alex (2024-10-10). "Slash and burn: is private equity out of control?". The Guardian. A private equity firm pools cash from investors, then uses those funds, along with an extraordinary amount of money borrowed from other sources (the 'leverage'), to take over a target company. Having acquired its target, a private equity firm may fire the management team, install new executives and decimate the workforce, or move it offshore. It can also liquidate the company's own assets to pay back investors and line the pockets of the firm's partners before selling the company to a new set of investors, a tactic sometimes known as a 'buy, strip and flip'.
↑ Balint-Kurti, Benjamin (2026-03-30). "Private Equity and the Death of the American Dream". Reimagining The Economy. Greenwell claimed that this doctrine is implicitly or explicitly at work in PE firms, as well as most large firms of any kind in our economy. This means that whatever good that institutions controlled by PE bring outside of profits – jobs, services, community wellbeing – will disappear if they don't serve the profit motive.
↑ PhilEdwardsInc (2026-07-26). "Why bowling alleys are replacing pins with strings". YouTube.

[1] Blasdel, Alex (2024-10-10). "Slash and burn: is private equity out of control?". The Guardian. A private equity firm pools cash from investors, then uses those funds, along with an extraordinary amount of money borrowed from other sources (the 'leverage'), to take over a target company. Having acquired its target, a private equity firm may fire the management team, install new executives and decimate the workforce, or move it offshore. It can also liquidate the company's own assets to pay back investors and line the pockets of the firm's partners before selling the company to a new set of investors, a tactic sometimes known as a 'buy, strip and flip'.

[2] Balint-Kurti, Benjamin (2026-03-30). "Private Equity and the Death of the American Dream". Reimagining The Economy. Greenwell claimed that this doctrine is implicitly or explicitly at work in PE firms, as well as most large firms of any kind in our economy. This means that whatever good that institutions controlled by PE bring outside of profits – jobs, services, community wellbeing – will disappear if they don't serve the profit motive.

[3] PhilEdwardsInc (2026-07-26). "Why bowling alleys are replacing pins with strings". YouTube.

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