Pitchfork Economics with Nick Hanauer Private equity’s plan to pillage America (with Brendan Ballou)
Jul 25, 2023
Brendan Ballou, a federal prosecutor and author of 'Plunder: Private Equity's Plan to Pillage America', dives into how private equity is reshaping the economy. He reveals the devastating impact on industries, including retail and healthcare, leading to significant job losses. Brendan explains the insidious nature of leveraged buyouts, short-term profit motives, and legal structures that shield private equity firms from accountability. He discusses critical reforms needed to curb their harmful tactics and emphasizes the importance of an economy that works for everyone.
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How Private Equity Actually Operates
- Private equity uses small equity, large investor capital, and lots of borrowed money to buy companies.
- Legal structures and incentives often make those takeovers harmful to workers and consumers.
Three Legal Flaws Driving Bad Outcomes
- Brendan Ballou identifies three core legal problems: short investment horizons, heavy debt use, and insulation from liability.
- These combined incentives push firms toward short-term extraction rather than long-term company health.
Family Pillow Business Sold And Destroyed
- Nick Hanauer recounts selling his family's long-running pillow business to a private equity-owned competitor.
- The buyer bankrupted the company within a year and left former employees exposed and hurt.