- Megan Greenwell’s Bad Company argues private equity’s leveraged-buyout model is undermining the American Dream by extracting value from retail, healthcare, local media, and housing.
- Four case studies show recurring tactics—loading acquisitions with debt, stripping assets, and cutting labor and services—that leave workers, patients, journalists, and tenants worse off.
- Evidence cited links PE ownership to higher bankruptcy risk, degraded care and reporting, and rent hikes, poor maintenance, and increased evictions in concentrated housing markets.
- Greenwell contends PE exploits preexisting sector weaknesses and calls for targeted regulation, transparency, and community and policy pushback rather than blanket demonization.
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Greenwell’s central thesis is that the American Dream—the idea of stable employment, decent housing, adequate healthcare, and vibrant local media—is under threat from a private equity model premised on short-term financial extraction. Across sectors, that model typically involves leveraged buyouts, high debt loads placed on acquired companies, aggressive cost-cuts, divestment of non-core assets, and minimal investment in long-term value. The four detailed case studies in Bad Company provide vivid illustrations:
- Employment and retail: Greenwell describes how the leveraged buyout of Toys “R” Us in 2005, led by Bain Capital and others, saddled the company with $5+ billion in acquisition debt, resulting in unsustainable annual interest obligations, job cuts, and ultimately the company’s bankruptcy in 2017—leaving workers like a floor supervisor without severance pay.
- Healthcare: A rural Wyoming hospital acquired by a PE firm cut key services—like obstetrics—forcing residents to travel great distances for essential care, undermining access and public trust in a sector already under strain.
- Media: PE ownership in local journalism, Greenwell shows, often leads to staff cuts and cost pressures that hollow out reporting capacity, eroding information ecosystems in smaller communities.
- Housing: Tenants in PE-owned properties frequently face deferred maintenance, mold, rodents, and when they attempt to demand remedies, risk eviction under dubious pretenses. At a broader scale, PE firms own high shares of apartments in many metros; for example, nearly 20% of Richmond’s rental units are PE-owned.
The data reinforce Greenwell’s stories and suggest structural risk: companies acquired by PE are reportedly more likely to go bankrupt, tenant housing becomes less affordable, eviction rates climb, and state governments are increasingly categorizing their jurisdictions as high-risk for PE abuses. For instance, the Private Equity Stakeholder Project (PESP) estimates PE may own up to 40% of single-family homes by 2030, and publishes a state risk index ranking housing, health care, jobs, pensions across 50 states.
Yet Greenwell—and several reviewers—warn against overgeneralization. The institutions she critiques often had preexisting weaknesses which made them vulnerable to PE takeover and dysfunction, such as failing business models, regulatory gaps, market decline or demographic shifts. The policy response suggested centers on selective regulation: mandating PE firms to retain ownership longer (to prevent flipping or asset-stripping), enhancing transparency in pension fund investments, strengthening tenant protection laws, and regulating how PE enters housing and healthcare.
From a strategic perspective, several implications emerge:
- For PE firms: increased regulatory scrutiny could affect deal structure, exit timelines, leverage ratios, and public reputation. Firms may need to adjust to growing legal risk and public pressure, particularly in housing and healthcare.
- For policymakers: data shows state-level variations—some states are “very high risk” in housing or health, others less so—giving opportunity for targeted policy interventions where the problem is worst.
- For investors, pension funds, and intermediaries: growing concern among limited partners (especially public pension holders) about ESG, social impact, and reputational risk, meaning that PE investments may be subject to more governance oversight or even divestment campaigns.
- For affected communities and civil society: Greenwell emphasizes existing examples of resistance—worker advocacy, tenant organizing, regulatory proposals—all of which suggest remediation is possible but requires organizing, legal infrastructure, and political will.
Open questions remain, which warrant further investigation:
- Quantitatively, how large is the differential risk of bankruptcy or failure of PE-owned vs. non-PE companies across sectors, when controlling for baseline financial health and industry decline?
- What is the long-term outcome for tenants of buildings acquired by PE? Do properties deteriorate permanently, or do some stabilize under stewardship?
- Which regulatory models have proven most effective (or promising) in protecting workers, tenants, and public health from PE-market excesses?
- How will macroeconomic forces—interest rates, inflation, credit availability—influence PE behavior going forward, especially in real estate and healthcare sectors? Are current models sustainable?
Supporting Notes
- Greenwell profiles four individuals—Liz (Toys “R” Us floor supervisor), Roger (Wyoming rural doctor), Natalia (local journalist), Loren (Virginia tenant)—whose livelihoods were deeply harmed by PE takeovers in sectors including retail, healthcare, media, and housing.
- The leveraged buyout of Toys “R” Us in 2005 left the company with over $5 billion in acquisition debt and annual interest burdens that contributed to its bankruptcy and 33,000-employee layoffs without severance.
- An estimated 12 million U.S. workers—about 8 percent of the total employed population—are working for companies owned by private-equity firms, per Greenwell.
- Private equity firms own about 20 percent of all apartment units in the Richmond metro (≈18,460 units), and 13.4 percent statewide in Virginia (≈77,345 units), with significant associations between high ownership and rent hikes, reduced affordability, and increased evictions.
- The Private Equity Stakeholder Project’s (PESP) State Risk Index ranks states by risk posed by PE in sectors like housing, healthcare, jobs, and pensions; Nevada, for instance, scores “very high risk” in housing with 94/100.
- PE’s acquisition of mobile home parks has grown: Institutional investors accounted for 23 percent of all manufactured home park purchases in 2020-2021 (up from 13 percent in 2017-2019), with over 1,800 parks now owned by PE firms. Post-acquisition, eviction filings in Florida communities increased by ~40 percent.