The Undisclosed Shenanigans of Private Equity

The Unchecked Power of Private Equity

Morgenson vividly paints a picture of the private equity firms as contemporary pirates, with the devastating ability to exploit businesses for personal gain, widen societal wealth disparities, and manipulate regulatory outcomes and public perceptions. Interestingly, she zeroes in on Apollo - known for its toughness - illustrating their exemplified strategies.

Operating in the Shadows

Just as the pirates of the old, these private equity firms, Morgenson notes, are brilliant at staying in the shadows where regulatory oversight and liability cannot reach them. They significantly control their shares and make minimal obligatory disclosures, with their powerful lobby prowess further enabling them to stay incognito.

Exacerbating Wealth Gap

These firms, Morgenson mentions, have perfected the act of business acquisition, cost reduction, debt-loading, and profit sales. However, the profits from their activities aren't invested back to the community. Consequently, the resulting wealth extraction creates even more disproportionate wealth distribution in society.

Examined Cases

Morgenson presents cases such as Tate's Bake Shop and the Cosmopolitan Casino that were massively exploited by private equity firms. Despite such negative actions, their justifications rely on investment returns comparable to low-cost index funds, which only further illustrates their unapologetic, self-justifying tactics.

Unmasking Private Equity Predatory Practices

An Unseen Legal Drama with High Stakes

In 2022, something peculiar occurred in Delaware's Chancery Court. Some pension fund beneficiaries alleged that Apollo and Carlyle's executives subtly altered their contracts, enabling them to receive substantial payoffs—to the detriment of shareholders. The crux: executives could receive tax-free shares and raise hefty tax deductions if they donated shares to charity. The outcome: financial losses for their companies and shareholders.

The Unveiling: Predatory Practices in Private Equity Firms

Despite their shadowy operations, labor unions and academics have exposed these firms' destructive tactics. Yet the battle to regulate these entities has been thwarted by their sophisticated lobbying efforts and trade associations. However, the tide might be turning as criticism of private equity firms is on the rise, both from liberals and conservatives.

Caught in a Regulatory Gridlock

The Securities and Exchange Commission (SEC) has attempted to introduce new rules to enhance transparency and curb harmful activities by private funds. But the industry has fought back fiercely, and recent Supreme Court rulings have diluted the SEC's authority. Concerns about the SEC's enforcement capabilities have come into the limelight as staff have significant decision-making power, and commissioners seldom disagree with their decisions.

A Call For Greater Regulatory Rights and Rigor

Implementation of stricter regulatory practices and amplified anti-trust scrutiny could potentially alleviate the damaging conduct of these firms. It's worth noting that private equity firms wield significant political clout through their organized lobbying efforts. And, in a promising development, anti-trust investigators at the Justice Department are increasing their oversight on board members placed by these firms within competing corporations in similar sectors.

A Revelation of Wealth Extraction

A Struggle in Silence

Here's a sobering truth: In the shadow of the mega-rich, one finds the tragic tale of Katie Watson, a victim of medical malpractice. When her parents dependably received a settlement promising regular income to supplement her care needs, it felt like a safety net. But their relief was short-lived. The insurance company, Executive Life, got seized in 1991, and those comforting payments disappeared, leaving them in a financial bind.

The Power, The Glitter

Enter Leon Black and his partners, seizing the moment and snapping up Executive Life's assets at a price cut more severe than a seasonal sale bonanza. It's a classic example of how the rich prey on an unsuspecting middle class. Yet, these are not isolated incidents, but a pattern. Deals like these have enabled Black and his ilk to accumulate ostentatious signs of wealth – private jets, yachts, and coveted art collections – all unattainable dreams for the middle class.

The Backstage Puppet-Masters

The dark silhouettes in this saga are not limited to Black and his fraternity. Many a time, such shrewd operations are aided, either consciously or unwittingly, by those vested with regulatory mandates. In this instance, John Garamendi, the California insurance commissioner, stoutly claimed policyholders fared well in the deal, offering tacit approval to the wealth extraction afoot. Such troubling narratives expose the complicity or complacency of authorities, underlining the role they often play in favoring the uber-rich.

Ghosts from the Past

Leon Black doesn't exist in a vacuum. The shadow of his father, Eli Black, looms large on his journey. Eli, too, had run-ins with controversies related to taxes and bribery, with his life ending tragically in suicide. In case you're seeing parallels, let's also illuminate Leon's association with Jeffrey Epstein, which dragged him into allegations of sexual harassment and rape, ultimately leading to his resigning from Apollo and the Museum of Modern Art. Thus, the past and present echo one another, punctuating the saga with scandals and tragic ends.

Decoding Corporate Takeovers: The 1980s Unraveled

The Rise and Fall of Drexel Burnham Lambert

The tale swirling around Leon Black, a noteworthy executive at Drexel Burnham Lambert, draws a vivid picture of the debt-selling exploits of the 80s. As a key player in the firm, he bore witness to the company's spectacular crash, brought about by an insider-trading scandal and fraudulent practices. This notorious downfall came to a head when in 1990, Drexel declared bankruptcy in a haze of scandal.

Birth of the Apollo Partnership

Never one to let grass grow under his feet, Black swiftly formed the Apollo partnership, post Drexel's debacle. This strategic partnership catered to distressed companies, seeking to use their debt securities to their advantage. As the dust from Drexel's collapse settled, Apollo was poising itself to seize undervalued securities, a move designed to profit from the tumult.

Millennium Class Under Siege

A resounding ricochet of these strategic market maneuvers was felt to the core by the American middle class. The dawn of leveraged buyouts struck a blow to their financial stability, repackaging secure pensions into risk-laden investments like 401(k)s. The dream of financial security was retreating at a swift pace, with the middle class feeling the pinch of escalating job loss, dwindling savings and sky-rocketing debt.

Leon Black's Bold Financial Play

Capitalizing on Financial Calamities

Knowledgeable investor, Leon Black, had his sights set on First Executive Corp - a flailing life insurance company on the brink of turmoil due to an over-reliance on junk bond investments. As the recession loomed and these high-risk bonds depreciated in value, First Executive’s ability to make good on its obligations to a massive number of policyholders started wavering.

Enter the Savior: Apollo

Seeing a golden opportunity to net substantial profits from the distressed securities First Executive was saddled with, Black set forth to acquire the portfolio. Forming a coalition with other previous Drexel executives - christened ‘Apollo’ - they forged ahead with the plan despite resistance from Fred Carr, the company's CEO.

The Controversial Takeover

Regardlessly, wielding his power as California's new insurance commissioner, John Garamendi sanctioned a takeover of First Executive and its assets. Despite prior affirmations from the National Association of Insurance Commissioners that the company could handle its financial tight spots, this unexpected decision sent shockwaves through the industry - eventually costing policyholders billions.

Conquering Corporate Obstacles

The Power of Activism

In her pursuit of justice and fair treatment, Maureen Marr surfaced as a force to be reckoned with. Through the creation of the Action Network of Victims of Executive Life, she championed the rights of policyholders struck by the failure of the insurance giant, Executive Life. She endeavored fiercely to ensure their voices were heard and acknowledged during the bailout process as it unraveled.

Navigating Legal Hurdles

Apollo, under the stewardship of Leon Black, faced its own challenges. They desired to acquire the bond portfolio of the floundering Executive Life. However, the existing California law that forbade foreign companies from buying American insurers, posed a significant obstacle for them.

Bridges and Barriers

Moreover, the California Insurance Commissioner, John Garamendi emerged as a hindrance for both camps. Marr viewed him as uncaring towards policyholders, raising concerns about his support. Apollo, on the other hand, held a crucial dependency on his approval for their takeover. On this convoluted path, an unlikely alliance was forged. Apollo's lawyer, Craig Cogut, reached out to Marr, assigning an external attorney to guide her, hoping to secure her endorsement.

Unveiling the 'Fire Sale Approach'

Missing Out in a Regaining Market

In the dawning of 1991, there was a hopeful resurgence in the junk bond market. However, the policyholders of a struggling insurer, Executive Life, missed the benefits of this recovery due to faulty decisions by the insurance department led by a certain Garamendi.

Valuation Missteps and Unfulfilled Gains

The insurance team unfortunately didn't assess the bond's worth independently, instead choosing to auction off the entire portfolio. Furthermore, a miscalculation regarding the valuation date of the bond portfolio meant that policyholders did not cash in on any subsequent gains of the market.

Complications Stemming From Involvements

As if the situation wasn't knotted enough, Altus Finance, NOLHGA, and Apollo joined in on the Executive Life deal, leading to shady transactions and further complications. The result was a severe impact on policyholders, with losses mounting up to nearly 3 billion dollars.

Turning Profits from Power Plays

How Apollo's Success Was Built Who's Suffering

Leon Black, a key figurehead and the productive genius at Apollo, made the most of deals like with the Executive Life. Through these lucrative ventures, he built a gold-studded reputation of successful investments, attracting an increasing pool of new, keen investors.

Yet, beneath this facade of success exist practices of extracting immense benefits at the cost of the very companies under their control. Worker benefits and pay experienced cuts while Apollo's coffers continued to swell.

Hatching Funds and Raising Influence

Black's next ambitious venture was the Apollo Investment Fund III, which soon found a key investor in CalPERS. This strategic infusion of capital not only funded Apollo, but further boosted their reputation, drawing more institutional investors into their fold.

A Labyrinth of Deals and Hidden Practices

However, the path to Apollo's continued success also passed through complex restructuring of companies like Salant Corp. and Gillett Holdings. Apollo managed significant control and orchestrated a sizeable revenue stream out of these deals, even as the California insurance department's opaque and inconsistent reporting kept policyholders in the dark.

The complexities of such business dealings, hidden ties with corporations like Western Union and the question-mark over Executive Life's assets continue to raise doubts about the fairness of Apollo's practises.

The Battle for Accountability and Advocacy in 'The Premonition'

Unmasking the Executive Life Scandal

In the intriguing narrative of 'The Premonition: A Pandemic Story,' a key player emerges - Maureen Marr. As an advocate at ANVEL, she dedicated her efforts to represent the policyholders of Executive Life. Persistently attending court sessions, Marr kept her clients updated on developments and led a significant advocacy that inspired policyholders to agitate for audits and a clearer understanding of their funds. Engagingly, despite these strides, Marr had to surmount the routine bureaucracy and resistance personified by insurance commissioner John Garamendi.

Challenging Power Dynamics and Corruption

Marr's interaction with the powers that be is fascinating. Garamendi, ostensibly keen to collaborate with ANVEL, played a different card at the decisive moment, preferring alignment with the buyers of Executive Life. Marr astutely declined an invitation to join the Aurora board—sagely identifying it as an attempt to win her support and potentially curtail her advocacy effectiveness. Corrupt power dynamics were blatantly at play when Marr’s request to engage an actuary’s review of the Aurora deal was granted too late. Such setbacks, however, didn't prevent Marr from admirable persistence.

A Facade of Legal Proceedings and Ramifications

It’s intriguing to see how, despite shady power tactics and potential corruption, the Aurora deal finally won approval. The subsequent events were momentous—fraud investigations sprouted, but the lawsuits against figureheads like Black and the Apollo partners diminished into oblivion. The tale gives us a candid insight into the power interplay, corruption, and the disappointing shortcomings of a legal system that failed to hold wrongdoers accountable, leaving Marr and the beleaguered policyholders still grappling with financial difficulties.

The Rise and Decline of Samsonite: A Cautionary Tale

Samsonite: Success to Distress

Founded by Jesse Schwayder, Samsonite grew to become a prominent luggage producer in the early 20th century. Fast forward to the 90s, the brand saw a drastic downturn. The pillage began with a takeover by predators such as private equity firms like Apollo who drowned the business in debt, stripped its assets, and then sold it off.

Unfortunate Pattern of Predatory Misdeeds

Research reveals that this predatory act is not uncommon. Many firms acquired by private equity firms end up bankrupt and shredded with job cuts. Cue in Samsonite, who fell victim to this destructive cycle, leading to a significant decrease in their stock value and mass layoffs.

The Aftermath of Corporate Greed

The fall of Drexel Burnham Lambert in the '80s offered a glimpse of consequences for unchecked corporate greed. Unfortunately, declining prosecutions of fraudulent offenses quickly dimmed this ray of hope. This relaxation indicated to the high and mighty in the corporates that crime was becoming increasingly profitable.

Worsening Economic Structure

The blind-eye turned to financial and corporate wrongs paved way to the 'too-big-to-fail' scenario and decreased white-collar crime prosecutions. As regulatory bodies loosened their grip, risks increased. The aftermath was the victimization of small enterprises, predatory lending practices, and the widening gap between executives' pay and unfair tax treatments.

Samsonite: A Tale of Predatory Economics

In a repeat of post-Civil War feudalism, modern financiers drain businesses' wealth and leave employees in dire straits. Samsonite’s story is a stark representation of this hurtful reality. The once thriving enterprise ended up shouldering immense debt and suffering mismanagement, with immense job losses ensuing.

Samsonite's story serves as a harsh lesson on the intentional overextension and economic disparity allowed by predatory lending practices.

The Impact of Private Equity on Small-town America

Unraveling New Madrid's Plight

The central narrative revolves around the dire consequences that unfolded in the small town of New Madrid, Missouri after Apollo's acquisition of Noranda Aluminum - its major place of employment. With a poverty rate approaching 20%, New Madrid's dependence on the smelting plant for both jobs and tax revenue was significant, making Apollo’s buyout more than a mere business transaction.

Apollo’s Winning, but at whose Cost?

Apollo, banking on aggressive financial strategies, quickly recovered its meager investment by piling debt onto Noranda and siphoning its cash, leaving the company gasping for survival. Apollo gained handsomely, while pushing Noranda to bankruptcy, and leaving the town and its school district bereft of jobs and tax revenue, respectively.

The Dark Side of Private Equity

The story of New Madrid paints a troubling picture of private equity's ruthless maneuvers. Prime firms, like Bain & Company and Blackstone, rather than competing, are known to collaborate in deals to serve their self-interests at the expense of investors. Retailers often bear the brunt, resulting in bankruptcies and job losses, proving once again the perilous implications of private equity buyouts.

Apollo's Tarnished Legacy

This predatory approach is not new in Apollo’s history. Its investments in the retail sector, specifically companies like GNC and Linens 'n Things, despite yielding profits for Apollo, led to financial turmoil for the companies and drastic fallout for their communities. This pattern of gain at others’ expense – a collapsed pension plan and lost tax revenue, amongst others – epitomises the detrimental impacts of such equity practices on small-town America.

The Impact of Private Equity Firms on Healthcare

Feeding Off the Healthcare Industry

Private equity firms have zoned in on the healthcare sector, captivated by its sprawling spendings and exceptional profit prospects. However, their incursion has led to undesirable consequences for patient care. Doctors feel the squeeze to up the ante on patient turnover and execute superfluous procedures, often to the detriment of the patient's health.

Healthcare Assets – A Goldmine For Equity Firms

These firms have acquired hospitals, nursing homes, and physicians' conglomerates, subsequently skyrocketing charges for patients while simultaneously trimming staff numbers. They indulge in related party transactions, obligating healthcare bodies to collude with other entities they own. Additionally, the property beneath these healthcare facilities serves as an attractive goldmine for these equity firms.

X-Ray of Private Equity Influence in Healthcare

Casting the spotlight on specific cases paints a picture of the extent of private equity's influence in the healthcare sector. One instance revolves around the acquisition of HCR ManorCare by The Carlyle Group. While Carlyle managed to retrieve its original investment within four years, there were accusations of Medicare fraud and healthcare violations. ManorCare experienced a significant surge in health code assassinations, along with questionable overbilling for unneeded therapy sessions.

Data on Private Equity and Healthcare Mortality Rates

Research underscores the alarming impact of private equity ownership on nursing homes. A study from the National Bureau of Economic Research demonstrated that nursing homes under private equity control witnessed a 10 percent spike in resident deaths versus their non-private equity counterparts. The study traced this trend back to reductions in nursing staff and declining compliance with care standards.

Dissecting Private Equity's Impact on Healthcare

Unseen Hands: Private Equity's Healthcare Takeover

The early 2000s saw a huge upsurge in private equity firm buyouts in the US healthcare industry. The impact of this has even been felt in the COVID-19 pandemic response. In 2005 and 2018, these firms carried out a staggering $80 billion and $100 billion worth of healthcare deals respectively. Their influence is such that entities like Apollo, Blackstone, Carlyle Group, and KKR now control significant shares of nursing homes, rural hospitals, and physician practices.

Playing Doctor: Corporations in Disguise

In an interesting twist, these firms even figured out a way to circumvent state laws preventing corporations from practicing medicine. Professional associations, ostensibly owned by doctors, were set up but in reality, these were controlled by companies. Firms like TeamHealth and Envision, owned by Blackstone and KKR respectively, secured contracts to operate more than a third of America's emergency rooms.

Life and Death: Stakes in Emergency Medicine

This takeover of the emergency medicine sector has raised concerns over patient care and potential exploitation of doctors. In the midst of this, companies backed by private equity such as EmCare have been linked to practices like surprise medical billing. This practice has both escalated healthcare costs for patients and exposed them to financial risks, inciting legislative action. Despite pushback by these firms through front organizations, the fight against surprise medical billing continues.

Scouring The Field: Increased Scrutiny Over Private Equity

Greater attention is now being given to the role private equity plays in healthcare, taking into consideration its potential impact on specialties like radiology and anesthesiology, and the high costs associated with freestanding emergency rooms. It's a complex, multifaceted issue that bears serious consideration, as the health of the nation may very well depend on it.

The Intricate Journey of Jazz Pharmaceuticals

KKR Takes the Reins

In a move to salvage Jazz Pharmaceuticals, buyout behemoth KKR jumped onto the struggling company's bandwagon in 2004. This boost wasn't just financial; KKR strategically placed its own executives on the Jazz boardroom table, thus maintaining a tight rein on its investment.

Acquisition and Expansion

Jazz's breakthrough was achieved through its shrewd acquisition of Orphan Medical, a specialist in rare disorder drugs. Around the same period, Jazz commenced the expansion of its sales force for Xyrem – a treatment for cataplexy. Despite the drug's black psychological past, it was its medical potential, recognized and approved by the FDA, that Jazz chose to capitalize on profoundly.

The Backlash and Rise

The story turns dramatic when the pharmaceutical company, hell-bent on pushing Xyrem's boundaries, paid the price through fines for promoting an unapproved use. Yet, the storm didn't deter Jazz, which debuted on the public market in 2007. Although some skeptics frowned upon the drug's infamous history, it was the company's strategic decision to inflate drug prices that insulated it from impending financial hardships.

Private Equity's Public Triumphs

Amidst the financial upheaval, private equity firms like Blackstone and KKR were making headlines, amassing wealth through their respective public outings. They originally steered clear of the crisis-high taxations and went on to exploit SEC-granted waivers. In another stroke of luck, a relaxed law by the SEC brought in big benefits for these financial goliaths, which they did not let it slip by.

Unmasking the Tactics of Private Equity Firms

The Unseen Profits of Private Equity Firms

Private equity firms such as CVC Capital and Apollo have a knack for enriching themselves in the backdrop of the businesses they acquire. An eye-opening instance is their ownership of the chemical enterprise, Taminco which blatantly violated federal narcotics laws by supplying a chemical named monomethylamine to Mexican drug cartels. Interestingly, no executive faced punishment illustrating the cushion private equity firms provide.

Hidden Costs, Wealthy Equity Firms

When Apollo subsequently assumed control of Taminco, they too had a novel approach to accruing wealth. They instituted management fees for consultation, legal procedures, and acquisition overheads. Even more intriguing, a whopping $35 million was slapped on for monitoring and oversight services, that purely existed on paper. The end losers? Employees, pensioners, and investors as these exorbitant fees nibble away at available funds.

Investigations, Fines and Persisting Ventures

A deeper peek into the dealings of private equity firms by the Securities and Exchange Commission revealed some fascinating aspects. Half of the fees levied by these investment giants were either inappropriate or flouted disclosure regulations. Apollo, for instance, sealed a $53 million settlement with the regulatory body. Nonetheless, despite these revelations, public pensions are still banking on private equity firms for investment. Pensions are overlooking the excessive fees that are eating into their returns and exacerbating the wealth disparity in the US.

Questioning Private Equity's Impact

Troubling Waves in Bayonne, New Jersey's Water Industry

Picture this, Bayonne residents being hit by an unexpected wave - not of water, but of escalating water bills. The culprit? Private equity firm KKR's water privatization deal that notably didn't quench the residents' needs, but left them struggling to foot their water bills.

The Fall of Toys 'R' Us and Worker Woes

Next, we move from water to toys - or more accurately, the demise of Toys 'R' Us. KKR's investment here wasn't a game-changer but led to the toy giant's bankruptcy. While KKR may have reaped hefty management fees, the workers were left holding an empty bag, jobless and without health benefits.

Indigenous Outcry Against the Coastal GasLink Pipeline

Finally, we travel to Canada's Indigenous territories. Here, KKR's investment in the Coastal GasLink pipeline wasn't met with cheers, but oppositions. The Indigenous communities resisted KKR's project as it violated their land rights and posed substantial environmental threats, leading to conflicts involving community members, protesters, and law enforcement.

The Dilemma of Private Equity in Healthcare

The Private Equity Predicament

The fascinating, yet concerning phenomenon of private equity firms shifting their focus towards healthcare has resulted in many challenges. Before the COVID-19 pandemic, many of these firms had started investing heavily in nursing homes. However, instead of improving healthcare standards, they imposed cutbacks on staff, compromising the quality of care and making residents more susceptible to infections like COVID-19.

Profit Over People?

Interestingly, these firms consider nursing homes as profitable investments, prioritizing financial gain above the health and well-being of residents. This misalignment of priorities had grave consequences during the healthcare crisis. Furthermore, the acquisition of hospitals by private equity has led to an unfortunate decline in investments in essential resources and equipment and salary reductions for hardworking healthcare workers.

Failure of Anti-trust Regulators

Anti-trust regulators have seemingly overlooked the increasing monopolization of the healthcare industry due to private equity buyouts. This lack of regulation has led to higher costs for patients, along with a significant drop in the quality of care. The rise of private equity-owned hospices has further complicated matters, making way for fraudulent billing activities and improper Medicare practices.

A Game of Risk: Apollo, Athene, and Private Equity

A Risk-Drenched Venture

In 2009, Apollo, a private equity firm, laid the foundation for Athene, an insurance entity. Athene's specialty? Selling annuities and buying corporations' pension obligations contributed to a substantial part of Athene's business model.

But this model carried significant risks, especially if Athene ventured into buying risky securities or suffered from a market failure or disruption.

Hidden Pitfalls of the Model

Apollo found an ingenious way to leverage its connection to Athene. The insurance firm used Apollo's hard-to-sell assets, which in return made money for Apollo. This brought considerable perils for Athene's policyholders, shielding Apollo from repercussions but leaving policyholders exposed to possible losses.

Eerie Echoes from the Past

The tactics Athene used bore a stark resemblance to former Executive Life Insurance Company. Both had an aggressive reliance on reinsurers and a surprising lack of transparency with offshore reinsurers based in Bermuda. This left Athene's policyholders vulnerable, sharing the burden of the firm's practices but little control over them.

The Imminent Perils

The creation of Athene let Apollo enrich itself while jeopardizing the policyholders. Despite expressed concerns about private equity firms' meddling in the insurance industry, the state regulators and the U.S. Treasury could little to shield the policyholders from the adverse effects if anything went wrong.

The Unseen Impact of Private Equity

Politics Entwined with Private Equity

The intimate partnership between private equity firms and former President Donald Trump was starkly evident, seeing potential advantages in his policies for their company portfolios. Trump's facilitative stance made it possible for individual investors to direct their retirement savings into private equity investments, despite significant risk associated.

Focusing on High-Stakes Investments

The green light given by the Department of Labor to private equity investments in retirement accounts was viewed as a hunting ground for private equity firms. Ready to tap into trillions of dollars in savings, they essentially had access to a huge pool of potential prey among investors.

Equity Takeovers: A Ticking Time Bomb?

The ripple effects of private equity takeovers are quite drastic. They seem to leave disruptive trails - bankruptcies, massive job cuts, and negative aftermaths felt by the workers, pensions, and healthcare sectors. Learning from these investment theatrics can not only enable an eye for spotting potential pitfalls but also foster a prudent approach in financial undertakings.

Private Equity Firms: An Insight into their Impact and Influence

Private Equity's Profound Impact

A compelling examination into the influence of private equity firms, specifically Apollo Global Management, reveals a complex narrative stretching across numerous industries. From healthcare to manufacturing, these titans of industry wield their considerable might, often leading to adverse outcomes such as job cuts and bankruptcies in the wake of their acquisitions.

Detrimental Results of Acquisitions

The conversation continues to the rippling effects following private equity's engagements, painting a stark picture of job losses, financial struggles, and community disruption. Examples from both the retail and manufacturing sectors are detailed, giving a face to the devastating consequences of private equity takeovers.

Self-dealing: A Profitable but Divisive Tactic

A striking analysis is made of self-dealing buyouts, where private equity firms like Apollo flip their acquisitions to themselves for a stunning profit. While unquestionably profitable, these practices also stir controversy, bringing about calls for stricter regulation and reform.

A Cry for Regulatory Measures

The discussion concludes with a distinct plea for regulatory reform in the private equity industry. Citing attempts from figures like Jack Reed and Elizabeth Warren, and interventions by the SEC and FTC, it's clear regulatory measures are needed to curb potential exploitations and ensure industry fairness.

The Revealing Impact of Private Equity Buyouts

Encroaching Trends in Corporate America

During the late '80s, leveraged buyouts burst onto the scene as the new norm for private equity firms. Notable firms like Thomas H. Lee Partners and Kohlberg Kravis Roberts started snapping up undervalued companies with the goal of flipping them for profit.

An Era of Shifting Responsibilities

Interestingly, this buyout boom aligned with the disappearing company pensions and the emergence of 401(k) plans. Suddenly, the responsibility of retirement planning fell squarely on the shoulders of the everyday American worker.

Government Action (or Lack Thereof)

Witnessing these changes, Congress held hearings to address the potential risk of these debt-laden takeovers, but due to strong lobbying pressure, nothing substantial came of it. Over time, additional support came in the form of deregulation, government inaction, and the Federal Reserve's low interest rates, offering excellent conditions for private equity to tighten its grip on the economy.

Hidden Costs of Private Equity Ownership

Not without consequence, the transition to private equity control came with a hefty price tag. Analysis indicates a link between private equity ownership in nursing homes and a slipping quality of care with hospitalization rates on the rise. Bankruptcy filings and job losses became more common, with filings spiking to ten times their previous rate following a buyout.

Personal Gain at the Expense of Society

Meanwhile, firms like Apollo and Blackstone reaped enormous wealth and power. Meanwhile, the community and its workers faced impoverishment. Loopholes were exploited and ownership cleverly disguised within complex corporate structures to evade laws against corporatized medicine. It would seem the winners and losers were clear in the rise of private equity buyouts.