Completed: 11/5/2025
Recommendation: Highly Recommended
Media: Audio
Recommended By: Nobody
Review:
This is a story that arguably started with Toys 'R Us, but was likely a story before that (we just didn't know). Private equity has been about buying companies and selling off their assets to derive short term profits. Arguably, there have been some times when private equity was successful (Hilton Hotels or Dell) the turn-arounds are remarkably rapid (5 years or so), with shocking frequency companies purchased by private equity end up in bankruptcy within 7 years. This book looks a few industries and some specific examples rather than try to evaluate the whole market (which has been well done by a large number of papers cited in the book). Private equity (think Black Rock or Bane Capital) has been horrible for the companies they have sucked dry. They do this by borrowing the money to take over the company (a leveraged buy out) in the name of the company they are buying (Toys 'R Us incurred the debt for the buyout, not the private equity company, KKR, I think, that did the buyout). Then they sell the real estate to another private equity component who leases the real estate back to the original owner (sale lease back; more debt for the company while the sale proceeds are distributed to the private equity company). It is pretty horrible stuff and it is part of the reason that hospitals (particularly rural hospitals) are failing. They are also deep in multi-family real estate (like apartment complexes that are poorly run and poorly maintained).
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