Plunder Private equity's plan to pillage America

Private equity firms must be reined in, argues federal prosecutor Ballou in his fiery debut. He explains that the business model of such firms relies on using borrowed money to purchase companies and then making extreme demands of acquisitions to repay investors and turn a profit, often at the expense of the company's long-term viability. Detailing the strategies private equity uses to swiftly extract money from businesses, Ballou describes how Sun Capital bought Marsh Supermarkets in 2006, sold the properties the stores stood on, and then pushed the supermarket chain into bankruptcy to avoid having to pay employee pensions. The author highlights the human toll of corporate wrongdoing and tells the story of a woman who had to move out of the home she rented from a private equity firm after her young son was hospitalized for exposure to toxic mold that the company refused to acknowledge or treat. Hair-raising tales of cruel neglect in nursing homes, exploitative hikes in healthcare costs, and underwriting prisons for profit will turn stomachs, and Ballou's reform agenda is well considered and convincing, including recommendations to cap how much compensation executives can receive after layoffs and to ban the practice of forcing companies to pay dividends by taking on exorbitant debt. This must-read exposé shocks and unsettles. (May)

An examination of the role of private equity companies in gutting large segments of the American economy. It's no small irony that the typeface in which federal antitrust investigator and prosecutor Ballou's book is set is "owned and licensed by a private equity portfolio company." So is much of the retail and service sector. In one case, the Carlyle Group bought the ManorCare company for $6 billion, which, by the magic of creative accounting, ManorCare had to pay back. Carlyle then sold much of ManorCare's real estate and forced it to pay rent. In the end, Ballou writes, the resulting insolvency spoke to three facts: Private equity buys for the short term, piles up debt and fees on its acquisitions, and walks away from the wreckage thanks to elaborate protections assured by Congress, which are ensured by endless lobbying. Citing a litany of failures wrought by equity firms--Sears, Radio Shack, Toys "R" Us, Rockport, Neiman Marcus, and more--Ballou notes that the owners make their fortunes on the backs of workers deprived of pension funds and jobs. In 2021, the CEO of one equity firm made more than 10 times the CEO of JP Morgan Chase. The power of equity firms is only growing, in large measure because many municipalities are turning to them to provide and maintain infrastructure as well as "services once provided primarily by the government, including ambulance companies and firefighting departments, 911 dispatch services, and technical colleges"--all funded by taxpayers and ratepayers with no say in the matter. Ballou concludes with a program keyed to federal agencies and departments--e.g., "investigate rollups," the practice of procuring small firms such as dental practices and merging them into larger companies; and contain the usurious practices of payday lenders, once controlled but then unleashed by Trump-era deregulation. A powerful, maddening account of some of the chief drivers of inequality and immiseration in the world's richest economy. Copyright (c) Kirkus Reviews, used with permission.