Summary of Rewind: How private equity kills companies and communities

Overview of Decoder — Rewind: How private equity kills companies and communities

This episode (a re-airing of Neelai Patel’s interview with journalist Megan Greenwell) unpacks Megan’s new book, Bad Company: Private Equity and the Death of the American Dream. Through four deep-dive stories (media, retail, housing, healthcare) and her own Deadspin experience, Megan explains how private equity (PE) works, how it differs from venture capital, and why its incentives often harm companies, workers, and communities. The episode blends history, reporting, concrete examples, and possible remedies.

Key takeaways

• Private equity’s core game is “making money from money” (financialization) rather than improving products or services.
• PE often buys companies using heavy leverage and extracts value via fees, real-estate sales, consolidation, and cost-cutting — sometimes leaving the companies worse off.
• PE is distinct from venture capital: VC typically funds product/people growth; PE typically buys established companies and monetizes them through financial engineering.
• The sectors most visibly harmed: local media, retail, housing (rentals), and healthcare — because PE can scale its extraction and the downstream harms are felt by communities.
• Remedies discussed include regulation (e.g., requiring PE to have “skin in the game” for buyout debt), state-level reforms, pension-fund pressure, nonprofit media models, and worker organizing.

Episode structure & main topics

• Intro + Megan’s background (Deadspin editor; experience after Univision sale)
• Deadspin case study: PE operational micromanagement and cultural mismatch
• History of PE: origins in the 1960s, the 1980s KKR era and leveraged buyouts, cultural ties to NYC real-estate/“greed is good” ethos
• How cheap money (post-2008, low interest rates) and policy choices (e.g., ACA, Fannie/Freddie practices) accelerated PE’s growth
• Four sector deep dives (media, retail, housing, healthcare) illustrating different mechanics and harms
• Discussion of the limits of market fixes, pathways for pushback, and policy options

Notable examples and case studies

• Deadspin (media): After Univision sold the site, a PE owner tried to “operationalize” editorial choices (e.g., cut non-sports coverage despite it outperforming sports), aiming to make Deadspin more like ESPN — illustrating how PE misreads the business and damages product/brand.
• Toys “R” Us and other retail collapses: used to show how LBOs and cost extraction can destroy large, previously dominant retailers.
• Housing: PE firms now own roughly 10% of U.S. apartments overall, and over 25–30% in some metro areas — enabled in part by cheap capital and policy steps that made housing assets attractive to PE.
• Healthcare: rural hospitals and physician practices acquired by PE often see services sold off (real estate), staffing cuts, and consolidation. Doctors report loss of autonomy and increased workload; medical labor market distortions (e.g., residency slot limits) blunt expected market correctives.

How private equity operates (explained)

• Leveraged buyouts: PE firms buy companies with large amounts of debt placed on the acquired company; the firm itself often avoids direct liability.
• Value extraction tactics: selling real estate, charging management/transaction fees, shifting assets between funds, aggressive cost-cutting and consolidation.
• Financialization: the industry profits from manipulating capital flows and financial structures rather than improving the underlying business or service.

PE vs. VC — key differences

• Venture capital: invests in founders and product growth; risk is taken on the firm’s capital; ties investor returns to business success.
• Private equity: often acquires whole companies, relies on leverage and financial engineering, and sometimes has weak direct alignment between the firm’s returns and the health of the portfolio company.

Social and community impacts

• Workers and professionals: PE’s model often turns previously semi-autonomous professionals (doctors, journalists, skilled retail employees) into cogs in a cost-driven machine, contributing to burnout and exits.
• Community infrastructure: hospitals, local newsrooms, and retail anchors that define local civic life suffer services loss and closures, eroding community cohesion.
• Public anger is rising, but PE operates with relative anonymity and complex ownership structures, making accountability diffuse.

Statistics and claims of note

• Businesses acquired by private equity declare bankruptcy at a much higher rate than other acquisitions (Megan cites roughly ten times as many).
• PE firms control a significant and growing share of U.S. rental housing — roughly 10% nationally and substantially higher in some metros.

Remedies and pushback covered in the episode

• Policy proposals: Elizabeth Warren’s Stop Wall Street Looting Act (noted as a model) — key idea: require PE firms to have legal responsibility for debt taken on by their portfolio companies (put skin in the game).
• State-level regulation: some states have moved fast after high-profile healthcare PE failures (Massachusetts, Pennsylvania).
• Pension funds and investors: activists and former employees have tried to pressure pension boards and institutional investors to divest or demand better terms.
• New business models: nonprofit/local-owned media experiments and community-backed solutions for news and services.
• Labor organizing: doctors and other professionals increasingly explore unionization or collective bargaining against overwork and loss of autonomy.

Memorable quotes / framing

• “Financialization means you’re making money from making money — you’re not making money from making the thing.”
• “Private equity made doctors into workers.” (captures the cultural and professional degradation PE can impose)
• Megan’s repudiation of conflating VC and PE: they’re “diametrically opposed” in incentives and outcomes.

What listeners can do / recommended next steps

• Read Megan Greenwell’s Bad Company for fuller reporting and case studies (published June 10).
• If concerned about local institutional ownership: research who owns your local hospital, landlord, or media outlet (ownership is often opaque but traceable).
• Pressure public institutional investors (pension funds, endowments) to ask tougher questions about where their capital goes.
• Support nonprofit and local journalism experiments that prioritize community value over financial extraction.
• Follow state-level legislative developments and support reforms that increase accountability for leveraged buyouts.

Final assessment

The episode provides a clear, reporter-driven case that PE’s incentives — especially when scaled to large companies and essential sectors — often produce social harm. It pairs historical context, vivid storytelling (Deadspin, hospitals, retail), and pragmatic remedies, making the argument accessible to audiences who may feel the effects of PE without recognizing the players or mechanisms involved.