Great piece. I've also read recently that PE is having a hard time selling investments and is getting lower returns lately. They run these businesses into the ground and then try to sell them. Who wants to buy the business?
This is something I really want Congress to do something about. Private equity ruins everything. It's disheartening to know how many public pensions are tied up in it
This is totally an evidence free assertion that you are making. We have a 22 trillion dollar economy. Is your core argument that private equity in the US isn’t working? I mean where’s the data for this?
Enshitifcation is just a buzz word heuristic, until someone actually comes up with some data it’s just another jargon word.
The business model of private equity is to buy something nice, then strip it for parts, immiserate employees, explain pensions no longer exist. It’s buying something valuable and taking away everything besides profit as superfluous.
It’s the stuff that isn’t profit that makes companies good. For employees, consumers, and maybe shareholders. PE privileges shareholder profit above all (and yes I know it’s been mandatory to do so, but only bc PE insisted on those laws) and makes it not only easy but necessary to subtract anything from that business that included humanity, whimsy, delight, generosity.
If your sole metric is, “Is the economy growing? Is this good for the economy?”” and nothing else, enshittification is the result. It’s alienating, it makes people feel tricked and ripped off so a few people who should be treated for pathological greed can instead grow their stacks. It makes people tense and insecure and reifies the position of workers as sub, lower, voiceless, controlled. That’s an artificial position that results when money is god.
We can choose to value all sorts of prosocial things. “We” chose profit and it’s making life worse for nearly everyone. Busting unions is antisocial, excessive profits are antisocial. There’s nothing “natural” or “inevitable” about organizing societies this way.
The irony is that pensions fund a significant part of PE. And PE has those incentives because pensions need to hit a 7% return on investment in order to not look like they are running out of money (which they are). PEs are holding up our pension funds.
What is effectively happening is that pensions need an aggressive return in order to continue to pay out to old people. Government bonds do not do enough so they have to look for increasingly higher returns at larger scale.
PE comes in and basically transfers the wealth. Instead of the consumer and worker getting the value of the service, the value gets siphoned up (it looks like worse quality, cutting jobs, and reducing costs) and that extracted value ends up as a number, 12% return on a few billions of dollars. Aggregated across the pension folio and the pension makes 7% and has a runway of 40-60 years and looks solvent. Take away the PE firm contribution and the pension is making 4-5% and is out of money in 10 years.
The “profits” that John speaks of is not really profit, it ends up on a paycheck out to some retired old person. The people running PE do not get the bulk of the profits (they get filthy rich in individual wealth but it’s a tiny fraction of the total wealth they are extracting).
A kneejerk comment from someone defending profit as a god over virtually everything that makes life good.
It's way too easy to imagine your response to someone working a fast food or retail job for minimum wage, not getting enough hours to receive health insurance, not having a predictable enough schedule to take on a second job. It would be something along the lines of, "So get a better job." Am I right?
Blaming the victims. Oversimplifying (ignoring the hard truths as "jargon") real hardships.
You're the religious one. You worship company takeovers that extract every ounce of value and everything that makes working for or doing business with the company pleasurable or even fair. Then jet with all the cash.
You're not a good person. Maybe advertising that online isn't so smart.
Profit is value added. Without profit you are back to sustenance. That is fine in a Ted Kazynski sense but it’s not fine if you want to live in a wealthy-open option open society. Otherwise Malthus reigns supreme and your life means nothing. You become a feudal peasant awaiting your incoming death. Profits aren’t a joke. They are civilization.
Nobody is against profit. People are against the sickening absurd levels of profit that so many companies (particularly PÉ) try to achieve at the cost of quality services/products and anyone who is not a shareholder or senior exec. In the attempt they often take decent companies/products/services and totally destroy them. I like PÉ to à swarm of locusts. They come in, destroy things and move on. And they don’t do this by innovating or creating anything truly new. They try to monopolize markets, and then simultaneously raise prices and gut everything that has a cost. Then squeeze out the profit and sell the broken husk to someone else, often another PÉ firm.
This is only true to a certain point. I'd like to add that there are diminishing marginal returns from reducing costs to maximize profit; in this case, the quality of the goods and services is decreasing by a far greater amount than the dollars being saved (from a community perspective). Even if you do believe in the current economic system, there is no denying that the costs of production have been externalized - whether it be to other countries or, more recently, to consumers at home. What Hanna is claiming here (and rightfully so) is that most of the economic value being generated through the extraction of resources is resulting in decreasing marginal utility for all of the world, and incrementally better returns for very few individuals who would not be experiencing those (or any gains) if they were forced to internalize the costs of their "cost-cutting" measures. The unfortunate truth is you cannot run an infinite economic system on a finite resource system unless you decouple economic growth from resource use (and this is something that Investopedia agrees on).
Oh, and another story. I had a solar panel system monitoring service. It was great. Contract comes up for renewal. Try to renew. Cannot. Cannot login to the renewal page. Send them email. No response. No phone number to call. The error message when I try to login is that my email ID is not recognized. This is literally the email address that they spam me on to renew my contract. Which by the way I WANT TO DO. Eventually I give up. Come to find out, yep, PÉ bought the compnlany. And totally enshittified it to the point tha customers CANNOT renew their contracts. Brilliant. Probably fired the guy who managed that piece of the system.
Talk to the people who interact with the enshittified companies. Example, friend in Dallas had an apartment. PÉ bought it. Cuts cleaning services. Canned the guard. Front door broke. So basically no security at all anymore. Tenants started to get crappier as better tenants started leaving. Became a high rise slum. Lots of stories like this out there.
Here is chatgpt/gemini prompt for you. There is data -it's not clean - but why would PE want it to be clean, it would shine a light on how destructive PE is. Next time you eat out and find it's not as good as it should be or as you remembered - recall the word enshitification, that's your taste of relevance.
What does the empirical literature—including quantitative, quasi-experimental, and longitudinal studies—as well as credible policy analysis and investigative reporting conclude about the effects of private equity ownership on quality and customer service? Please provide an evidence-based synthesis with an annotated bibliography, organized by sector (with particular focus on healthcare and retail). For each study or report, summarize the research design, key quantitative findings (e.g., effect sizes, staffing levels, pricing changes, quality or satisfaction metrics), proposed causal mechanisms, and stated limitations. Clearly indicate where findings are explainable, mixed, or contested. Emphasize statistically significant results and discuss implications for consumer protection, market competition, and regulatory oversight.
Well thanks for letting everyone know you're operating under a lack of knowledge as to what PE means. Lenders are not PE. Come on John context matters.
Do you know what private equity is? If you’re a lender you are by definition private equity!!! Don’t you understand? How can I use your prompt when any lender is by definition “private equity.” How can we establish the counter factual?
This is 100% not true. A bank can issue a loan under its own terms, typically with a fixed rate. The bank is not involved in the operations as long as the business is making its loan payments. PE firms have a 10-year investment lock-up and use a portfolio of companies to obtain a return. They take an active role in managing that portfolio to maximize returns.
Banks are not PÉ as you should well know. Banks actually assume risk. PÉ loads the debt onto the target acquisition and then squeeezes profit out. PÉ is not lending. And Simultaneously taking fees.
Debt is not equity. John has no idea what he’s talking about. And clearly he has no idea what PÉ actually does to destroy and or monopolize companies/services/products. There are TONS of horror stories out there. Sears/KMart essentially got PEed on. And then they died.
"Conclusions and Relevance This cohort study with difference-in-differences analysis found that private equity acquisition of nursing homes was associated with increases in ACS emergency department visits and hospitalizations and higher Medicare costs."
Oh wait, I remember ANOTHER story of PÉ. There used to be a small broadband internet provider in my neighborhood. It was called RCN. They were supposed to be pretty decent and pretty fairly priced. I was actually considering switching from Verizon Fios to them. Then I read some reviews on Yelp. 332 reviews. 1.7 stars average rating. And I was wondering, huh, WHAT HAPPENED? They used to be considered pretty good. Then I googled. Yup. Bought out by PÉ!!!! And those guys promptly began enshittifying the company. It’s a hot pile of sh*t now. Overcharging people, etc. Only the ignorant who can’t read reviews sign up for them now.
It’s not a buzz word. It’s adult humans Who have been around longer than 10 years watching everything… everything!… get worse and then researching the cause.
Public pensions caused the rise of PE, not the other way around.
Public pensions need at least a 7% return in order to not becoming hopelessly insolvent. Government bonds do not return 5% yields like they used to, so pensions have to reach for higher yield bonds more and more in order to hit their financial targets and remain looking stable.
There’s no other way to put it except that the promised retirement funding to old people is being paid for by squeezing the quality of life out of the young.
You are probably spot on. I hadn't made the connection, but public pension debt is a ticking nuclear bomb for many states, especially generous blue states. When we left CA, which is owned lock stock and barrel by public unions, I think the debt was 40k per citizen, including children . Legislatures pretend it doesn't exist, hoping the bomb detonates on a future watch instead of theirs. It's insanity.
You're assuming there are alternatives. PE = monopoly. They take over not just one airline, but most. Not just Del Taco, but also El Pollo Loco and Baja Fresh. They remove choice; people aren't apathetic, they're stuck. They create a captive consumer base. How many ERs are within driving distance of your home? Are you shopping during an emergency, or going to the place your insurance covers? Guess what, that's a vulture capital ER. It will be short-staffed and cost more than it did before the takeover.
After VCs fully enshittify, they jet. They go into the investment knowing it's time-limited because eventually the product is ruined and the customers flee. There's no plan to invest and stick around to innovate or improve anything; the model is to force themselves onto unwilling organizations, extract alllll the value, then haul ass out of there. Timing is everything. They understand the cycle they create and know exactly when it's time to bail.
Trademark law exists to prevent that type of failure. If someone can take over the brand and reduce the quality, that's the same core problem that trademark law exists to solve. Maybe there should be some sort of notice requirement: whenever a brand changes ownership, there has to be a notice with the names of the old and new owners next to the brand logo/name for the next month. That's consistent with the purpose of preventing fraud, which is essentially what trademark dilution is.
Not really, the key with PE is they are investing in services that are embedded in daily life, they make a profilt while delivering less quality, less service, more environmental damage because the inertia and apathy of individuals enables it.
Again this is an evidence free assertion. 22 trillion dollars worth of value added means that restaurants in 2026 are suddenly worse than 1964 because of PE?
You miss the point of PÉ. They prefer to set up cartels and monopolies where customers either cannot switch or where they face high switching costs. Then they raise prices, destroy quality and extract fees.
Well, now we see you do not know the definition of a bank nor PE. Hopefully your employer is able to see your uneducated comments. Please provide evidence of PE firms not cutting costs and decreasing quality to increase profits. I will be patiently awaiting your reply, Sir John Putz.
What does “lending at the levels of PÉ” mean? PÉ doesn’t lend money. It gets the target company to borrow the money. PÉ extracts fees, cuts anything cost related, attempts to monopolize some market, region, service, etc. Cranks prices up. Cashes out. Company might die. Tons of people will lose their jobs.
And don't forget colleges and universities, who have over the past several decades years have increasingly invested their endowments in private markets and whose boards are filled with people who work in private equity. (And their investment offices are filled with PE alum). It's a great model for education!
Writing about it almost feels like pulling the thread of a web — you begin to see just how much of our modern-day world is propped up by these forces. Such a good point about colleges — it's all interconnected!
yes, all interconnected! I was also writing something recently about how a lot of PE leaders went to run payday lending after 2008 and the failure of their firms. Like it’s all one giant sandbox for them to play in 😵💫! Loved the post.
Hanna, this is an important article. For profit healthcare needs far more guardrails than exist today.
There are certainly many industries where the search for quick short term profits to service greater leverage has had negative if not disastrous effects on consumers and employees.
However, there are industries where companies cannot survive with diminished quality. I think of some of the luxury brands.
As well, sometimes venture capital, which is a type of private equity, provides real gifts to consumers and employees because of generous funding. In the 1990s tech boom, I could order a VHS tape to be delivered to my home (with a delicious chocolate chip cookie as a bonus) for only four dollars. It was obvious the company was losing money and it did eventually go out of business. That was a transfer of VC resources to consumers like me.
One nuance I've noticed over the decades is how it creates an "absentee landlord" vibe to seemingly everything. When people moved out to suburbs and no longer lived in inner cities, slumlords either inherited or took over the housing stock, and because they didn't live there, they had zero non-financial investment in the community. Take your dress example: A $350 dress bought at a dress shop would've come from a place with a local owner with a sense of pride, and young impressionable employees. If there had been a quality problem, it would've likely been addressed with an apology or an offer to repare or replace. You also would've had the chance to inspect the garmet yourself before buying.
Now, everything appears to be "spray and pray": Cook up flattering photos for tiny shiny rectangles, then ship substandard stuff and hope people are too lazy to return things. It's not as if you're going to walk into their corporate premises and confront the owner(s), and potentially damage their local reputation via word-of-mouth. So there's no incentive ... your one-star review will get shoved down to the bottom of the pile (if not be deleted!), and they'll keep enshittifying. Worse yet, all those other business you describe who have to have customer-facing employees are now just skeleton crews, with no supervision and life lessons from on-site owners actually coming to work every day; there are no more role models or mentors. Some were clearly better than others, but daily interaction with an owner/boss is an important part of one's career development. If "the management" is some abstract faceless presence in New York or Greenwich or Sand Hill Road, there's no empathy because everything's out-of-sight, out-of-mind.
“Something I’ve been thinking about lately is how the world for which many seem to nostalgically pine (bustling downtowns, vibrant local schools, and cultural institutions) was a product of inefficiency. Yes, it was “inefficient” for every town to have five local banks with bank Presidents making $100,000 a year rather than five CEOs in New York and Aspen making $50 million. Yes, it was “inefficient” to have main street hobby shops with too much inventory and long waits when something had to be ordered. Yes, it was “inefficient” to have small farms rather than sprawling factory operations. Yes, it may have been “inefficient” for each town to have two newspapers and local radio and TV stations rather than having everything flow through mega-cap tech outlets onto ubiquitous shiny rectangles.
But those inefficiencies amounted to a de facto income and quality-of-life redistribution system, the absence of which many now lament, even as they’re unwilling or unable to pay to restore it.”
There is an incentive for Amazon and such to allow one-star reviews to be seen and reflected in the average, since being able to provide reasonably good products is core to their business model.
Work in finance and have dealt with PE over time…my takeaway is most of these people are not actually very creative nor do they really understand the world around them. They have a model and everything has to fit into it. When it doesn’t fit they get angry and start cutting things instead of actually thinking things through. Because at the end they (and their investors) need to get paid. Also, the rise in PE is a direct response to banks getting out of lending to businesses post 2008. It’s a real shame - they did a much better job in many ways.
Well written, and I find it pretty hard to disagree with what you're saying as someone who writes about finance too!
Whilst private equity is somewhat useful (funding private businesses that can't access public markets for said funding), I think the incentive structures have been f****d up so now we have private equity and private credit inserting themselves in various areas of our lives, all in the name of "returns."
I'm not American btw - this trend transcends America, it's more global than you think.
Yes yes. Singapore and the City of London are central to maximizing profits via PE. Definitely a global phenom. It’s such a shame! It would be marvelous to see countries shift their priorities just slightly so that profit and shareholder value aren’t paramount.
It’s possible to have a healthy economy AND for most employees to have a decent standard of living without devoting themselves 24/7 to making someone else rich.
I used to buy Reformation years around 2017 and it was much better then. i used to have pretty strong environmental motivations and brands were/are clever at manipulating that. things started arriving worse & worse. I’ve sworn off Ref and Everlane. Thrifting is the best option for environment-friendly AND getting actually high quality materials (like Everlane claims).
I used to really like Reformation and Everlane, too, and have pieces from years ago. Now, it's hard to find anything that's not synthetic. So frustrating! Appreciate this article's reflections.
Such a bummer. And then you can find companies like Frank and Eileen if you want to support a more ethical option (if you want to pay $300 for a cotton shirt 😩) but if it lasts, maybe it’s worth it
" They’re trying to be good at looking like the kind of company that gets funded," - God I relate to this so much. I remember the final straw I had at one of my jobs was when we moved to a fancy new building that was incredibly ill-equipped and rushed; no chairs, no power, no way to even complete our work. Management comes in and tells us to clean up our areas because "This doesn't look good to investors" - yeah no shit, I can't do any work and this is what you care about?
Also, love your boldness to not hold your tongue with those PE guys. Everyone should read this!
Yes yes yessss! Private equity is killing the brands we love (most recent victim was Sprinkles Cupcakes). It's why I do what I do - I help independent brands build ecosystems rooted in a POV that draws in their loyal fans. This establishes solid foundation the brand can grow on so (hopefully), they don't have to take PE money. They've worked to build a world that aims for impact 🙌🏻
One of my colleagues is an industry leader in psychotherapy. She and her husband have, for 40 years, attended a particular annual conference -- to actively connect with others in the field, learn about new findings and therapeutic methods, and to give presentations. This year she returned from the conference utterly disheartened, saying the weeklong event was one big gathering of -- you guessed it -- private equity shmoozing and AI apps for therapy. She's been aware of the growing changes for some time now, but this year the blatant devolution of the field was completely gutting to a professional who has given her heart and soul to this healing art.
On a similar note, earlier this month the Brown University School of Public Health published an article highlighting a notable increase in private equity purchases of autism therapy centers. Go figure -- autism is big business now. PE is everywhere, hollowing out whatever they can get their hands on. It's no longer "just business," PE is a cultural wrecking ball.
I can’t stop thinking about this stat from higher ed writer Jeff Selingo’s 1/6/26 newsletter (who is really worth reading!): “more than half of graduates [from the nation’s elite colleges] have taken jobs in just three sectors: finance, tech, or consulting.” Between that and the rise of business as a major/disappearance of other humanities everywhere , this is all kids are learning to do and how they see value. PE is THE aspirational job out of top colleges. So if it is ubiquitous now, just wait….
This was a great piece about a very important - albeit “unknown” by most of the general public - topic! I read this NYT article in 2024 about why the vet has gotten so expensive and it opened my eyes to this.
PE has gone past what they were supposed to be, imo. The flaw in our financial system is that companies “must” grow annually. Forcing PE companies to search for any industry that they can extract from, and we are paying the price for this unrealistic idea of perpetual growth.
Also, I love how you call it what it is with “extraction.” Too often people don’t call out the issue explicitly. Thanks for sharing.
Private equity is based entirely on optimising efficiency. Unfortunately for us, inefficiency is where humans live. It’s where most of humanity is found. Removing the inefficiencies from the economy removes the humanity.
Interestingly, humans and the intangible value we create, account for 92% of 2025’s S&P 500 market value (see Ocean Tomo’s 2025 IAMV study). If we humanized our work environments and demonstrated authentic caring, regardless of the ownership or equity structure, people would be happier and businesses more profitable. Spot on, Dan!
Great piece. I've also read recently that PE is having a hard time selling investments and is getting lower returns lately. They run these businesses into the ground and then try to sell them. Who wants to buy the business?
This is something I really want Congress to do something about. Private equity ruins everything. It's disheartening to know how many public pensions are tied up in it
This is totally an evidence free assertion that you are making. We have a 22 trillion dollar economy. Is your core argument that private equity in the US isn’t working? I mean where’s the data for this?
Enshitifcation is just a buzz word heuristic, until someone actually comes up with some data it’s just another jargon word.
The business model of private equity is to buy something nice, then strip it for parts, immiserate employees, explain pensions no longer exist. It’s buying something valuable and taking away everything besides profit as superfluous.
It’s the stuff that isn’t profit that makes companies good. For employees, consumers, and maybe shareholders. PE privileges shareholder profit above all (and yes I know it’s been mandatory to do so, but only bc PE insisted on those laws) and makes it not only easy but necessary to subtract anything from that business that included humanity, whimsy, delight, generosity.
If your sole metric is, “Is the economy growing? Is this good for the economy?”” and nothing else, enshittification is the result. It’s alienating, it makes people feel tricked and ripped off so a few people who should be treated for pathological greed can instead grow their stacks. It makes people tense and insecure and reifies the position of workers as sub, lower, voiceless, controlled. That’s an artificial position that results when money is god.
We can choose to value all sorts of prosocial things. “We” chose profit and it’s making life worse for nearly everyone. Busting unions is antisocial, excessive profits are antisocial. There’s nothing “natural” or “inevitable” about organizing societies this way.
The irony is that pensions fund a significant part of PE. And PE has those incentives because pensions need to hit a 7% return on investment in order to not look like they are running out of money (which they are). PEs are holding up our pension funds.
What is effectively happening is that pensions need an aggressive return in order to continue to pay out to old people. Government bonds do not do enough so they have to look for increasingly higher returns at larger scale.
PE comes in and basically transfers the wealth. Instead of the consumer and worker getting the value of the service, the value gets siphoned up (it looks like worse quality, cutting jobs, and reducing costs) and that extracted value ends up as a number, 12% return on a few billions of dollars. Aggregated across the pension folio and the pension makes 7% and has a runway of 40-60 years and looks solvent. Take away the PE firm contribution and the pension is making 4-5% and is out of money in 10 years.
The “profits” that John speaks of is not really profit, it ends up on a paycheck out to some retired old person. The people running PE do not get the bulk of the profits (they get filthy rich in individual wealth but it’s a tiny fraction of the total wealth they are extracting).
Ya that’s just a ton of evidence free jargon. But whatever fits the needed religious narrative.
A kneejerk comment from someone defending profit as a god over virtually everything that makes life good.
It's way too easy to imagine your response to someone working a fast food or retail job for minimum wage, not getting enough hours to receive health insurance, not having a predictable enough schedule to take on a second job. It would be something along the lines of, "So get a better job." Am I right?
Blaming the victims. Oversimplifying (ignoring the hard truths as "jargon") real hardships.
You're the religious one. You worship company takeovers that extract every ounce of value and everything that makes working for or doing business with the company pleasurable or even fair. Then jet with all the cash.
You're not a good person. Maybe advertising that online isn't so smart.
Profit is value added. Without profit you are back to sustenance. That is fine in a Ted Kazynski sense but it’s not fine if you want to live in a wealthy-open option open society. Otherwise Malthus reigns supreme and your life means nothing. You become a feudal peasant awaiting your incoming death. Profits aren’t a joke. They are civilization.
Nobody is against profit. People are against the sickening absurd levels of profit that so many companies (particularly PÉ) try to achieve at the cost of quality services/products and anyone who is not a shareholder or senior exec. In the attempt they often take decent companies/products/services and totally destroy them. I like PÉ to à swarm of locusts. They come in, destroy things and move on. And they don’t do this by innovating or creating anything truly new. They try to monopolize markets, and then simultaneously raise prices and gut everything that has a cost. Then squeeze out the profit and sell the broken husk to someone else, often another PÉ firm.
This is only true to a certain point. I'd like to add that there are diminishing marginal returns from reducing costs to maximize profit; in this case, the quality of the goods and services is decreasing by a far greater amount than the dollars being saved (from a community perspective). Even if you do believe in the current economic system, there is no denying that the costs of production have been externalized - whether it be to other countries or, more recently, to consumers at home. What Hanna is claiming here (and rightfully so) is that most of the economic value being generated through the extraction of resources is resulting in decreasing marginal utility for all of the world, and incrementally better returns for very few individuals who would not be experiencing those (or any gains) if they were forced to internalize the costs of their "cost-cutting" measures. The unfortunate truth is you cannot run an infinite economic system on a finite resource system unless you decouple economic growth from resource use (and this is something that Investopedia agrees on).
Who profits ? Certainly not those of us reliant on these (now even more) terrible companies.
LOL “civilization”
Reading this exchange it's like John pertz is a robot (maybe an atm) replying to a human Charlotte banks.
There was plenty of data in the article. Did you read it?
Oh, and another story. I had a solar panel system monitoring service. It was great. Contract comes up for renewal. Try to renew. Cannot. Cannot login to the renewal page. Send them email. No response. No phone number to call. The error message when I try to login is that my email ID is not recognized. This is literally the email address that they spam me on to renew my contract. Which by the way I WANT TO DO. Eventually I give up. Come to find out, yep, PÉ bought the compnlany. And totally enshittified it to the point tha customers CANNOT renew their contracts. Brilliant. Probably fired the guy who managed that piece of the system.
Oh, look, more data! Thanks, Ben
Another one trying to justify being a shitty person. Your parents aren’t proud
Talk to the people who interact with the enshittified companies. Example, friend in Dallas had an apartment. PÉ bought it. Cuts cleaning services. Canned the guard. Front door broke. So basically no security at all anymore. Tenants started to get crappier as better tenants started leaving. Became a high rise slum. Lots of stories like this out there.
Did you bother to look for evidence?
Here is chatgpt/gemini prompt for you. There is data -it's not clean - but why would PE want it to be clean, it would shine a light on how destructive PE is. Next time you eat out and find it's not as good as it should be or as you remembered - recall the word enshitification, that's your taste of relevance.
What does the empirical literature—including quantitative, quasi-experimental, and longitudinal studies—as well as credible policy analysis and investigative reporting conclude about the effects of private equity ownership on quality and customer service? Please provide an evidence-based synthesis with an annotated bibliography, organized by sector (with particular focus on healthcare and retail). For each study or report, summarize the research design, key quantitative findings (e.g., effect sizes, staffing levels, pricing changes, quality or satisfaction metrics), proposed causal mechanisms, and stated limitations. Clearly indicate where findings are explainable, mixed, or contested. Emphasize statistically significant results and discuss implications for consumer protection, market competition, and regulatory oversight.
Well thanks for letting everyone know you're operating under a lack of knowledge as to what PE means. Lenders are not PE. Come on John context matters.
Did you just cite a Gen AI prompt like its a source? Thats so f-ing cring Stan.
Do you know what private equity is? If you’re a lender you are by definition private equity!!! Don’t you understand? How can I use your prompt when any lender is by definition “private equity.” How can we establish the counter factual?
This is 100% not true. A bank can issue a loan under its own terms, typically with a fixed rate. The bank is not involved in the operations as long as the business is making its loan payments. PE firms have a 10-year investment lock-up and use a portfolio of companies to obtain a return. They take an active role in managing that portfolio to maximize returns.
A bank will act like
Banks are not PÉ as you should well know. Banks actually assume risk. PÉ loads the debt onto the target acquisition and then squeeezes profit out. PÉ is not lending. And Simultaneously taking fees.
How can debt be equity? Seems like they are two entirely different things in a company’s capital structure.
Debt is not equity. John has no idea what he’s talking about. And clearly he has no idea what PÉ actually does to destroy and or monopolize companies/services/products. There are TONS of horror stories out there. Sears/KMart essentially got PEed on. And then they died.
I'm sorry you don't find the higher death rates in PE owned hospitals and ERs sufficient data.
Do you have a personal ER you can go to in an emergency?
How about the data on nursing homes?
https://jamanetwork.com/journals/jama-health-forum/fullarticle/2786442
"Conclusions and Relevance This cohort study with difference-in-differences analysis found that private equity acquisition of nursing homes was associated with increases in ACS emergency department visits and hospitalizations and higher Medicare costs."
Or this:
https://www.healthcare-brew.com/stories/2025/09/10/private-equity-firms-buy-nursing-homes-ownership-worsens-care-quality
Then there's Accounting firms.
https://cpatrendlines.com/2026/01/14/cornerstone-pe-deal-tracker-dealflow-timeline-private-equity-investments-in-cpa-and-accounting-firms-2020-2026/
https://www.kiplinger.com/personal-finance/a-private-equity-fund-bought-your-accounting-firm-now-what
I'm going to be curious how long independence lasts in mergers if the participants in a deal don't know who owns the CPA.
Oh wait, I remember ANOTHER story of PÉ. There used to be a small broadband internet provider in my neighborhood. It was called RCN. They were supposed to be pretty decent and pretty fairly priced. I was actually considering switching from Verizon Fios to them. Then I read some reviews on Yelp. 332 reviews. 1.7 stars average rating. And I was wondering, huh, WHAT HAPPENED? They used to be considered pretty good. Then I googled. Yup. Bought out by PÉ!!!! And those guys promptly began enshittifying the company. It’s a hot pile of sh*t now. Overcharging people, etc. Only the ignorant who can’t read reviews sign up for them now.
bootlicking loser lol
It’s not a buzz word. It’s adult humans Who have been around longer than 10 years watching everything… everything!… get worse and then researching the cause.
You’re one of them. 🤬
Private equity owns congress, too.
Public pensions caused the rise of PE, not the other way around.
Public pensions need at least a 7% return in order to not becoming hopelessly insolvent. Government bonds do not return 5% yields like they used to, so pensions have to reach for higher yield bonds more and more in order to hit their financial targets and remain looking stable.
There’s no other way to put it except that the promised retirement funding to old people is being paid for by squeezing the quality of life out of the young.
You are probably spot on. I hadn't made the connection, but public pension debt is a ticking nuclear bomb for many states, especially generous blue states. When we left CA, which is owned lock stock and barrel by public unions, I think the debt was 40k per citizen, including children . Legislatures pretend it doesn't exist, hoping the bomb detonates on a future watch instead of theirs. It's insanity.
That strongly suggests the phenomenon is self-correcting. These companies exist to make a profit; if they can't do that, they'll stop existing.
You're assuming there are alternatives. PE = monopoly. They take over not just one airline, but most. Not just Del Taco, but also El Pollo Loco and Baja Fresh. They remove choice; people aren't apathetic, they're stuck. They create a captive consumer base. How many ERs are within driving distance of your home? Are you shopping during an emergency, or going to the place your insurance covers? Guess what, that's a vulture capital ER. It will be short-staffed and cost more than it did before the takeover.
After VCs fully enshittify, they jet. They go into the investment knowing it's time-limited because eventually the product is ruined and the customers flee. There's no plan to invest and stick around to innovate or improve anything; the model is to force themselves onto unwilling organizations, extract alllll the value, then haul ass out of there. Timing is everything. They understand the cycle they create and know exactly when it's time to bail.
That sounds oddly similar to what our government does with "regime change" in other countries: Haiti, Chile, Iraq, Venezuela, et al.
Bingo. 🤬
So this would be an information failure.
Trademark law exists to prevent that type of failure. If someone can take over the brand and reduce the quality, that's the same core problem that trademark law exists to solve. Maybe there should be some sort of notice requirement: whenever a brand changes ownership, there has to be a notice with the names of the old and new owners next to the brand logo/name for the next month. That's consistent with the purpose of preventing fraud, which is essentially what trademark dilution is.
That sounds like the kind of horsesh*t “Austrian” economists say.
If you're going to be a jerk I'm not going to listen to you.
Not really, the key with PE is they are investing in services that are embedded in daily life, they make a profilt while delivering less quality, less service, more environmental damage because the inertia and apathy of individuals enables it.
Again this is an evidence free assertion. 22 trillion dollars worth of value added means that restaurants in 2026 are suddenly worse than 1964 because of PE?
22T Value added, LOL! us gdp hasn't even grown that since 1964.
I’m sorry annual value added is now 30-31 trillion
You keep saying “value added”. I think you mean “value destroyed.”
Again, it's ultimately self-correcting. People take a while to switch to competitors, but the shift happens in aggregate.
You miss the point of PÉ. They prefer to set up cartels and monopolies where customers either cannot switch or where they face high switching costs. Then they raise prices, destroy quality and extract fees.
Not sure, it also often becomes the new lower baseline. Shrinkflation is still here, flying under the tollerance radar.
This sounds like meme conscious…..
No, they don’t stop existing, the companies they bought & ruined stop existing; like Toys R Us.
Borders Books.
True but a bank will act just like PE when lending at the levels of PE
Well, now we see you do not know the definition of a bank nor PE. Hopefully your employer is able to see your uneducated comments. Please provide evidence of PE firms not cutting costs and decreasing quality to increase profits. I will be patiently awaiting your reply, Sir John Putz.
What does “lending at the levels of PÉ” mean? PÉ doesn’t lend money. It gets the target company to borrow the money. PÉ extracts fees, cuts anything cost related, attempts to monopolize some market, region, service, etc. Cranks prices up. Cashes out. Company might die. Tons of people will lose their jobs.
This was exactly what I was thinking.. improve profitability to sell TO WHOM exactly? Because no one else has money for this but them.
And don't forget colleges and universities, who have over the past several decades years have increasingly invested their endowments in private markets and whose boards are filled with people who work in private equity. (And their investment offices are filled with PE alum). It's a great model for education!
Writing about it almost feels like pulling the thread of a web — you begin to see just how much of our modern-day world is propped up by these forces. Such a good point about colleges — it's all interconnected!
yes, all interconnected! I was also writing something recently about how a lot of PE leaders went to run payday lending after 2008 and the failure of their firms. Like it’s all one giant sandbox for them to play in 😵💫! Loved the post.
Hanna, this is an important article. For profit healthcare needs far more guardrails than exist today.
There are certainly many industries where the search for quick short term profits to service greater leverage has had negative if not disastrous effects on consumers and employees.
However, there are industries where companies cannot survive with diminished quality. I think of some of the luxury brands.
As well, sometimes venture capital, which is a type of private equity, provides real gifts to consumers and employees because of generous funding. In the 1990s tech boom, I could order a VHS tape to be delivered to my home (with a delicious chocolate chip cookie as a bonus) for only four dollars. It was obvious the company was losing money and it did eventually go out of business. That was a transfer of VC resources to consumers like me.
Sohrab Ahmari covers these sorts of crossed wires in his book Tyranny, Inc.
It's not well written but it's definitely on to something.
Just looked it up and will check it out- thanks!
Exactly! This is very under reported. The endowments of "selective colleges" screwing the American middle and lower class - over 30+ years.
Not to mention public sector pension funds.
Great run-down!
You know something's a problem when even Donald Trump's handlers make it a populist platform element https://www.reuters.com/world/us/us-will-ban-large-institutional-investors-buying-single-family-homes-trump-says-2026-01-07/ .
One nuance I've noticed over the decades is how it creates an "absentee landlord" vibe to seemingly everything. When people moved out to suburbs and no longer lived in inner cities, slumlords either inherited or took over the housing stock, and because they didn't live there, they had zero non-financial investment in the community. Take your dress example: A $350 dress bought at a dress shop would've come from a place with a local owner with a sense of pride, and young impressionable employees. If there had been a quality problem, it would've likely been addressed with an apology or an offer to repare or replace. You also would've had the chance to inspect the garmet yourself before buying.
Now, everything appears to be "spray and pray": Cook up flattering photos for tiny shiny rectangles, then ship substandard stuff and hope people are too lazy to return things. It's not as if you're going to walk into their corporate premises and confront the owner(s), and potentially damage their local reputation via word-of-mouth. So there's no incentive ... your one-star review will get shoved down to the bottom of the pile (if not be deleted!), and they'll keep enshittifying. Worse yet, all those other business you describe who have to have customer-facing employees are now just skeleton crews, with no supervision and life lessons from on-site owners actually coming to work every day; there are no more role models or mentors. Some were clearly better than others, but daily interaction with an owner/boss is an important part of one's career development. If "the management" is some abstract faceless presence in New York or Greenwich or Sand Hill Road, there's no empathy because everything's out-of-sight, out-of-mind.
I once wrote a screed on how it was inefficiency that gave us the very community dynamics for which people are most nostalgic. https://gunnarmiller.substack.com/p/the-golden-calf-of-optimization :
“Something I’ve been thinking about lately is how the world for which many seem to nostalgically pine (bustling downtowns, vibrant local schools, and cultural institutions) was a product of inefficiency. Yes, it was “inefficient” for every town to have five local banks with bank Presidents making $100,000 a year rather than five CEOs in New York and Aspen making $50 million. Yes, it was “inefficient” to have main street hobby shops with too much inventory and long waits when something had to be ordered. Yes, it was “inefficient” to have small farms rather than sprawling factory operations. Yes, it may have been “inefficient” for each town to have two newspapers and local radio and TV stations rather than having everything flow through mega-cap tech outlets onto ubiquitous shiny rectangles.
But those inefficiencies amounted to a de facto income and quality-of-life redistribution system, the absence of which many now lament, even as they’re unwilling or unable to pay to restore it.”
As Pogo said, we have met the enemy and he is us!
There is an incentive for Amazon and such to allow one-star reviews to be seen and reflected in the average, since being able to provide reasonably good products is core to their business model.
Every (deserved) one-star review I've ever written for businesses on Google Maps has been removed.
I have not had this experience.
How and why do they get removed?
The establishment proprietors must've reported my one-star reviews to Google and had them removed.
Work in finance and have dealt with PE over time…my takeaway is most of these people are not actually very creative nor do they really understand the world around them. They have a model and everything has to fit into it. When it doesn’t fit they get angry and start cutting things instead of actually thinking things through. Because at the end they (and their investors) need to get paid. Also, the rise in PE is a direct response to banks getting out of lending to businesses post 2008. It’s a real shame - they did a much better job in many ways.
Well written, and I find it pretty hard to disagree with what you're saying as someone who writes about finance too!
Whilst private equity is somewhat useful (funding private businesses that can't access public markets for said funding), I think the incentive structures have been f****d up so now we have private equity and private credit inserting themselves in various areas of our lives, all in the name of "returns."
I'm not American btw - this trend transcends America, it's more global than you think.
Yes yes. Singapore and the City of London are central to maximizing profits via PE. Definitely a global phenom. It’s such a shame! It would be marvelous to see countries shift their priorities just slightly so that profit and shareholder value aren’t paramount.
It’s possible to have a healthy economy AND for most employees to have a decent standard of living without devoting themselves 24/7 to making someone else rich.
I used to buy Reformation years around 2017 and it was much better then. i used to have pretty strong environmental motivations and brands were/are clever at manipulating that. things started arriving worse & worse. I’ve sworn off Ref and Everlane. Thrifting is the best option for environment-friendly AND getting actually high quality materials (like Everlane claims).
I used to really like Reformation and Everlane, too, and have pieces from years ago. Now, it's hard to find anything that's not synthetic. So frustrating! Appreciate this article's reflections.
Such a bummer. And then you can find companies like Frank and Eileen if you want to support a more ethical option (if you want to pay $300 for a cotton shirt 😩) but if it lasts, maybe it’s worth it
"So — are you gutting nursing homes or destroying farms?” you might not have been a hit that night, but we would definitely be friends.
" They’re trying to be good at looking like the kind of company that gets funded," - God I relate to this so much. I remember the final straw I had at one of my jobs was when we moved to a fancy new building that was incredibly ill-equipped and rushed; no chairs, no power, no way to even complete our work. Management comes in and tells us to clean up our areas because "This doesn't look good to investors" - yeah no shit, I can't do any work and this is what you care about?
Also, love your boldness to not hold your tongue with those PE guys. Everyone should read this!
Yes yes yessss! Private equity is killing the brands we love (most recent victim was Sprinkles Cupcakes). It's why I do what I do - I help independent brands build ecosystems rooted in a POV that draws in their loyal fans. This establishes solid foundation the brand can grow on so (hopefully), they don't have to take PE money. They've worked to build a world that aims for impact 🙌🏻
Great explainer, bravo! Everyone should read this.
One of my colleagues is an industry leader in psychotherapy. She and her husband have, for 40 years, attended a particular annual conference -- to actively connect with others in the field, learn about new findings and therapeutic methods, and to give presentations. This year she returned from the conference utterly disheartened, saying the weeklong event was one big gathering of -- you guessed it -- private equity shmoozing and AI apps for therapy. She's been aware of the growing changes for some time now, but this year the blatant devolution of the field was completely gutting to a professional who has given her heart and soul to this healing art.
On a similar note, earlier this month the Brown University School of Public Health published an article highlighting a notable increase in private equity purchases of autism therapy centers. Go figure -- autism is big business now. PE is everywhere, hollowing out whatever they can get their hands on. It's no longer "just business," PE is a cultural wrecking ball.
You broke this down beautifully! I say this as a financial journalist. Really nicely done and a good read.
I appreciate it :)
I can’t stop thinking about this stat from higher ed writer Jeff Selingo’s 1/6/26 newsletter (who is really worth reading!): “more than half of graduates [from the nation’s elite colleges] have taken jobs in just three sectors: finance, tech, or consulting.” Between that and the rise of business as a major/disappearance of other humanities everywhere , this is all kids are learning to do and how they see value. PE is THE aspirational job out of top colleges. So if it is ubiquitous now, just wait….
These are the only high-status, high-paying careers left. It makes sense
It does. They are currently ruining tech, which used to be an enjoyable industry to work in.
What does it say about us that our youth see careers in value extraction as their only viable option?
They’re trying to pay off college loans
This was a great piece about a very important - albeit “unknown” by most of the general public - topic! I read this NYT article in 2024 about why the vet has gotten so expensive and it opened my eyes to this.
PE has gone past what they were supposed to be, imo. The flaw in our financial system is that companies “must” grow annually. Forcing PE companies to search for any industry that they can extract from, and we are paying the price for this unrealistic idea of perpetual growth.
Also, I love how you call it what it is with “extraction.” Too often people don’t call out the issue explicitly. Thanks for sharing.
Sharing the article I mentioned for anyone who wants to check it out: https://www.nytimes.com/2024/06/23/health/pets-veterinary-bills.html?smid=nytcore-ios-share
One of the best articles I've read on Substack
Private equity is based entirely on optimising efficiency. Unfortunately for us, inefficiency is where humans live. It’s where most of humanity is found. Removing the inefficiencies from the economy removes the humanity.
Interestingly, humans and the intangible value we create, account for 92% of 2025’s S&P 500 market value (see Ocean Tomo’s 2025 IAMV study). If we humanized our work environments and demonstrated authentic caring, regardless of the ownership or equity structure, people would be happier and businesses more profitable. Spot on, Dan!