How Private Equity Plundered The American Economy | Ft. Adam Conover
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- เผยแพร่เมื่อ 6 มี.ค. 2022
- Have you ever wondered why so many major retail chains have filed for bankruptcy or closed locations recently? Toys r Us, Baskin Robbins, J Crew, Hertz, 24 Hour Fitness, Dunkin Donuts…. It’s pretty much an entire mall. It’s not just because of the pandemic:
There’s a shadowy mafia that has been ripping off the entire US economy while making themselves rich. Really rich. This group is responsible for bankrupting hospitals, your favorite retail chains and even ripping off Taylor Swift. They’re called Private Equity. And your company might be next. We took a deep dive into the shocking strategies that the Private Equity Mafia uses.
Hope is not all lost though. There are things we can do to fix these problems. Transparency, for one:
Enter the Securities and Exchange Commission, or SEC, the federal agency charged with stopping bad actors from manipulating the markets. The SEC, led by Biden appointee Gary Gensler, has proposed changing their rules so that private equity firms would have to, you know, tell the truth about their returns of their funds, and disclose transparent information about all the fees that they charge. Obviously the lobbying groups representing private equity firms are up in arms about the idea that they might have to disclose even some basic information to their investors. Meanwhile in Congress, the federal Stop Wall Street Looting act, introduced in 2021, would limit the amount of debt used in buyouts, increase transparency, and close tax loopholes.
And what can you do, yourself? Well, unionize. A unionized workforce is better protected against a leveraged buyout.
Without those changes, the private equity mafia is going to keep getting away with their schemes to line their pockets with YOUR money.
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I grew up in Indiana going to a grocery chain called Marsh. John Marsh was no saint, but from what I hear, you could work there full time until retirement with a reasonable quality of life and a pension for retirement.
Eventually, Marsh was bought by private equity firm Sun Capital Partners. they cut full time staff to as much part time as possible, stopped buying local produce, and mismanaged the pension.
They stole a good company from us, they even robbed Marsh retirees of their pension when they shut down. Then, the Sun Capital executives paid themselves bonuses while shuttering Marsh in 2018.
If there is such a thing as pure evil, it's private equity
Where are these 2nd amendment people when you need them?
@@frankfahrenheit9537 too busy sücking corporaté cöck and deep thróating boots because their parents were siblings and they got psyop'd by Fox News
Jan 12, 2024 Kroger has partnered with private equity firm MidOcean Partners to form an investment company focused on exposing emerging CPG brands to consumers, the grocery chain announced Thursday.
Bye, bed bath and beyond,,,
@@frankfahrenheit9537
On the side of these firms because they believe they get to be one of the billionaires one day.
My company was purchased by a private equity firm years ago. At the time the popular talking point was “We’ll have deeper pockets to hire more people to grow our business with this investment.” Over the years, we saw jobs cut, no roles backfilled, the slow removal of our company culture in the ways they gave back to workers. Used to have a monthly birthday party for all birthdays, more company picnics and give aways, free food in the break room, an annual bonus, higher raises, etc. No more. They cut costs everywhere little by little mostly in employee benefits to create a false balloon in profits so we could be sold off to another company, giving the PE firm and any executives with a private equity holding a huge windfall. We were sold to IBM, which has been even worse. Our company as it was is no more… before this our company prospered for thirty years. Thanks for making this video. I wish it wasn’t so relatable 😢
This should be illegal
Oh man... "over the years" hit hard here. Company I worked for was purchased by a M&A firm (backed by Private Equity) during the pandemic. There was no slow roll to killing our company culture, layoffs/jobs cut, no roles backfilled and just taking advantage of people that were loyal to what used to be.
Sounds just like my company I work for. Everything was good then now everything is falling apart. I don't know about what my company is invested into though.
Well that's what you get for voting for corrupt politicians that let this happen so they get a cut of profits at your expense.
I guess everyone needs to start their own company. Being an employee is rough
I worked for Hertz for 22 yrs. We were the leader in the industry. Top market share. Solid financials. We were purchased by a private equity group in a leverage buyout. It destroyed the company. Thousands lost their jobs, customer service went in the toilet. The age of the cars on the road skyrocketed. Absolute destruction. Then they bought Dollar and Thrifty Rent a Car. Now 3 companies own all the brands you have heard of. Hertz went into bankruptcy entirely because of the private equity pirates. It was during covid but they had dug the grave long before that. It pisses me off to this day. I was proud of what I did for a living and these scumbags destroyed it for everyone. But a handful of people made a fortune while our careers were trashed.
Usually the PE Firm is after something besides the business... such as the control of a large pool of retirement money profit sharing which they can use for their own market manipulation.
The financialization and thus decoupling of vertically integrated businesses and THUS leveraging of many previously unleveraged assets has made the businesses much more likely to fail, additionally the vertical integration was typically a means of controlling material costs within a business's supply chain. I was in the pulp and paper industry and something I saw troubling which also served to significantly raise prices was the divestiture of pulp and paper company timber property. These were managed stands of timber which were routinely planted harvested and replanted, THIS forested land was utilized infrequently as it takes a decade or more in order to grow and harvest trees for pulpwood. The privately held family companies needed cash to pay inheritance taxes so they sold off some or all of their different NONCORE assets, ie TIMBER land, this increased their cost of pulpwood and caused a variability to the prices the mill had to charge in order to turn a profit. ALL FOR A ONE TIME GAIN which was NOT fully considered a to the rammifications 50 years down the road.
I'm wondering what the companies who are being bought up by the PE Firms are getting out of this. Seems if it's a stable and profitable business before the PE Firm comes along, that it would be better to turn away their offer.
@@MonkeyMind69"Leveraged Buyout"
You need to educate yourself on how the stock market works.
They offered a lot more than the going stock share price for company stock and bought it from short sighted and greedy shareholders until they had a controlling interest in the company; at which point they could do whatever they wanted to it.
@@EXRazeBurn...So what you're saying is that it wasn't negotiated and approved by the companies being bought out by the PE firms, but more like a hostile takeover?
Hertz was bought by United Airlines in the 1980S and was forced to be sold off when Marvin Davis did a corporate raid of United this is nothing new
To all who think that business tactics like those shown in the video should be illegal, remember the Golden Rule. "Those with the gold make the rules." The greed is ridiculous.
i think it used to be illegal. Clinton 'The Glass-Steagall legislation describes four provisions of the United States Banking Act of 1933 separating commercial and investment banking.[1] The article 1933 Banking Act describes the entire law, including the legislative history of the provisions covered.'
*"Those who print the fiat currency..."
@@sparkybob1023That legislation was written under Bush Srs' Administration, but it took Bill Clinton to get it passed. BOTH sides are owned by the same greedy psychopaths.
That's not the golden rule fool. Treat others the way you want to be treated I believe is the "golden rule". You are right about greed. Greed is the root of all evil.
I know that's not the the real rule we were taught growing up. I quoted what was told to me by someone who is in small financial investing. It rang true then and still does today as to what is really running the world. @@partysugar519
I remember my sheer disgust upon learning why ToysRus was no longer around
The idea that the same kind of utter scumbags have simply gone on to ruin even bigger things is downright criminal
Yes it is criminal and who is supposed to pursue and stop criminal behavior ?
Government !
@@rrmackay The same government outsourcing even domestic jobs by importing labor, sure.
@@churblefurbles I wasn't commenting on their incompetence or downright corruption but rather pointing to who is responsible for doing the job. People always want to blame nameless investors or CEOs or companies that have enough players in them to not who is responsible. A government official has signed documents that they will be held accountable yet people complain about business.
ToysRus couldn’t compete with Walmart, Target and online retailers. That’s what the closed.
Absolutely nothing to do s it Zhen. Zero
I’m a product of 2 now-retired teachers, and this makes my blood boil. My parents started in the 70s, so their retirement is pretty secure, but my stepmom switched to teaching in the 90s, and she got a way worse retirement deal. The gap between rich and poor has widened so much in just this generation that I do not see home ownership or retirement in my future, just debt. It’s incredibly depressing
scary to think that these grimy companies own the retirement pensions of firefighters, teachers (like me), librarians, tradesmen, etc. even those in the public sector/unions are not safe from these evil people.
Gen X is the first die at your desk generation
I got a feeling that totally happened to the company I worked for. We celebrated making 1 BILLION with a huge party and health fair where we got free food, prizes, and even flu shots if you wanted, then they got bought out and suddenly only 'executives' could use the employee cafeteria, my department got moved into a tiny building across the street, and two years later it went bankrupt.
In other words if your company announced that they got bought by private equity, start looking for a new job
And cutting phone lines and cat 6 in random locations
@@NSA_test_server_59274 what does "cat 6 in random locations" mean
There should be a law that you can’t buy out a company and then transfer the debt you used to buy that company to that company. That seems to be the crux of the problem. The PE firms have to keep that debt on their own books.
LOGIC!
Makes total sense! And because it does...it'll never happen.
🙄
Everything in this video is a consequence of exactly this
That is not the crux of the problem, it's just one of the financial instruments that allow this to happen in this manner, but without doing that it would still be possible, very profitable and just as harmful. If I learned one thing by working 10 years in our ministry of economics developing and implementing financial instruments is that banks and states will create whatever mechanism lobbyists from Capitalist tell them to, it's not the instruments, it's Capitalism itself.
So I want to buy YOUR grocery store and you sell it to me for $1 Million, I take out a loan for $900k and obviously the collateral is YOUR grocery store... This happens like EVERY SALE BRO LOL....
Only bit you missed is them working with hedge funds to short the stock of the company to get another win in their hat!
And they failed with gamestop 🤣🤣
@@EroticInferno and AMC
Apes strong together!
HODL and DRS GME / AMC
crypto bros seething and coping
name a better combo
you all are socialism, Marxism or authoritarianism woke
If it looks like the mafia, swims like the mafia, and quacks like the mafia, then it probably is the mafia. RICO when? IRS?
The IRS is asleep.
@@HolyknightVader999 Wrong, that mafia owns IRS in the first place.
My previous job got bought by private equity. Last year, they laid off literally over 60% of all hourly employees across the company. They just recently filed Chapter 11 Bankruptcy Protection
This is what happened to Hostess. THREE TIMES. Then, they blamed the debt on the employees.
Now that's some good-quality gaslighting. I bet they buried it deep it corporate-speak, too.
So that is why you could not find sno balls for so long, I have to check the package to see who owns them now
@@jessebrook1688: I thought the same thing as you, except I thought of it as “master-level” gaslighting.
Yes that makes sense. If only employees could work for free... No commitment today, it's a real shame.
The PetSmart comment made me realize that's the reason so many things changed for the worse while I worked there (in the petcare department, not the salon). So many infuriating, nonsensical regulations, requiring us to do double the work in half the time, taking away dedicated time for animal care and instead making us do all of it while also helping customers, which had a hugely negative impact on the quality of life of those animals. It was infuriating and beyond frustrating and part of what eventually made me decide to quit after many years of working there.
Capitalism ruins everything.
Wow. You're a quitter. Couldn't take a little adversity sweetheart? 🙄
@@alexcisneros2980 Nice try honey 😂
@@verenabecker2724 gotta shoot my shot ya know ¯\_(ツ)_/¯
@TendingSands nah, no worries, I was answering an arsehole there.
This happened to the largest furniture retailer in Michigan, Art Van. They went from being in the black, owning all the land their stores were on (i.e. no debt), to completely bankrupt and shuttered in 2-3 years of being bought out by a PE firm. The smarter employees that had pensions jumped ship before this happened, but it screwed a lot of people over.
I work in finance, this guy explained it in laymen terms but yeah the average person doesn’t understand how much of a sham finance i general is not just private equity
This video was great... but it barely scraped the surface of what happened to Toys R Us and other stores. If you are interested, there are numerous videos and articles written about it. In the meantime you may be asking yourself why is this allowed? Adam tried to explain it, but I think there is a much simpler way to show it: Ask yourself this question: When Toys R Us went out of business what did you hear about it? did you hear the business was mismanaged? did you hear that it couldn't keep up with Amazon? If that is what you heard, that is why this is allowed to happen. Private Equity firms put in a lot of effort to steer the initial narrative when the gut a famous business and it implodes in the public eye. They will spend millions on PR to make sure the first stories out shine the light in the wrong direction. After a few weeks when the truth comes out, most people have already accepted the initial story and moved on.
OK but if the company is doing well, why would they take a loan?
@@aicram62 the company is offered a loan that may seem to be on good terms. Toys R Us had stand alone stores, expensive to maintain and then COVID
@@henrimatisse7481 They were already bought out and going under well before covid though
@@aicram62 Companies take loans all the time, whether in debt or not. Most often in the hopes of expanding their business which requires more capital.
i feel like i heard about toys r us going bankrupt for like years on end
In "Monopolized" David Dayen wrote about how the collusion of hedge funds and private equities is the main driver of monopolization. The system incentivizes it by making consolidation very lucrative for the parties involved. Bank "consultants" just sit at some meetings; easiest way to funnel wealth upward to people who do nothing for a living, and destroy the lives of workers in the process.
None of this would be possible if Ronald Reagan hadn't stopped enforcing our antitrust laws. No president since has started enforcing the antitrust laws again.
Someone needs a slap across the face cause this is cartoonishly phucked up.
@@Madronaxyz
And we "Liberals," like to pin things on Trump. But. No presidents, right?
That includes the democrats.
This is horseshit.
@@Madronaxyz seems like they have made it historical to con the American public. "trickle-down reagonomics" - everyone seemed to believe this at one point. Now that we know it is pure load of BS, it's so engrained that we cannot seem to shift out of it
@@Madronaxyz Ask Apple or Microsoft about that….bullshit.
I started working at Petsmart in 2015 as a grooming assistant/ "bather". I quickly moved to small animals and stayed there for 3 years. We had a great store manager then who shielded the store from most of the BS. That said, I’m glad I left when he did. He got moved to a crappy store and then got fired for a grooming dog death (not his fault but someone had to be on the chopping block).
I will tell you this, Grooming deaths are 100% due to time pressures. Most dogs are put in kennels with blowers to dry, allowing multiple appointments at a time. However, certain breeds CANNOT be put in these drying kennels or they will overheat. This is also why we weren’t allowed to accept sedated dogs (which led to owners lying about sedation). An overworked bather can forget to go back and turn off the dryer (which is what happened at the store mentioned above) or they can feel pressured to put a vulnerable breed in a dryer because 99.99% of the time the dog will be fine. 😢
I wonder if this is why the media has spent so much time focusing on the FTX fallout. It helps to keep us distracted from what else is going on behind the scenes.
'The marketing pitch is that these private equity investors are geniuses and are beating the public markets by leaps and bounds. When you dig a little deeper, when you lift up the rocks, you find out that these kinds of claims are untrue. They're flat with the public markets, or in some cases underperform... It's a terrific deal for the private equity managers. They put up very little money (10% on average). They get a huge amount of fixed fees. In the process, we've created a new plutocracy.'
- Jeffrey Hooke, Finance Professor ｜ Johns Hopkins Carey School of Business
It would seem finance guys spend all their time finding new ways to market products and financial deals that essentially defrauds and steals. It explains why while they only occupy 7% of the workforce they reap 25% of GDP. It's about time that we come up with better ways to counter
If you only risk 10% of capital, you can rip the company apart and destroy the other 90% of the company to get 11% back.
There is an incentive to turn 90% of a company into 11% profit.
Leveraged buyouts would be illegal in any sane, functioning society
Money isn't productive in any form. That's a problem. Making money from money is gonna kill the entire economy. Only new (or refurbished) products add value to the economy. It would be better if money wasn't wasted in making "more" money.
@@MyBiPolarBearMax The first thing such "investors" do is selling all assets and hire it back. It's what they do everywhere in the world. Even in places where they do not know what money is. Most of the time poor countries with starving people. And they still make a profit. How?...
That's just not true. PE funds outperform other investments by a large margin especially during crisis times like in 2008 and now. Due to the amount of leverage and little risk of having to pay anything when companies go bankrupt, they are extremely profitable for anyone investigating.
The rules should also allow and encourage the bankruptcy courts to claw back the fees paid to these private equity firms.
The courts are now corrupt as well so....
The companies that profit off of this, pay off politicians and judges so that doesn't happen.
The rules probably contain some element of that but the DOJ is not enforcing the law against private equity so those laws are irrelevant.
I've always said, "We have the best government money can buy."
This happened to the pharma company I worked for. It got snapped up by private equity, then we were all laid off with no notice. Sorry, not getting that severance package we were promised. We got to keep our health care insurance for the rest of the month. Five days.
It was actually illegal and the state said they were investigating, but nothing happened.
Wow... I normally take things like this with a grain of salt, until I have had a chance to cross reference with other sources, but when you worked for a company that was bought by a private equity firm, and literally watched everything that happened from the inside as an employee that was described in this video with your own eyes, you can say with 100% certainty, "Yeah, this is the real deal truth!"
A grain of salt? So you dont believe it until it happens close enough , or to , you. U must be a rethug
Private Equity sounds like a pretty good way to transfer wealth from the poor to the rich!
I'm pretty that's it's only purpose is to siphon money.
I think most of the seemingly more complicated financial mechanisms are just siphons that should be legal
Rewrite the laws and level of transparency so they can siphon money without people seeing
@@shanescott8241U meant Illegal ??
bingo
When I first found out what private equity was, I was appalled and confused. I read that in private equity the company which is being bought is responsible for getting the loan, not the company that wants to buy said company. That is totally upside-down.
Think reverse mortgages. Another predatory scheme.
I'm reminded that a company I worked for was bought out by a PE firm around the end of my employment there (Covid-19 pulled that rug out from under me). After years trying to get back with that company because it was genuinely one of the first I enjoyed working at, I find out by other channels that the entire department I had worked for had been outsourced. In retrospect I should have seen the writing on the wall when other departments were "gaining" outsourced employees, it would have certainly saved me a lot of time and grief. Thankfully I make more working an overall better job, but it sucks seeing what private equity does to hollow out companies and destroy them.
This is also a wrinkle that I had never known about Toys'R'Us, I had assumed they just made the wrong choice when online commerce started becoming commonplace, but of course its more complicated and infuriating than that...
Wow, I personally lost a great job as a result of the domino effect of Toys R Us shutting down, and had no idea it was to do with PE!!
The media at the time criticized Toys R Us for not investing in online sales as if they were irresponsible dummies
They were servicing so much debt from the purchase by PE that they couldn't afford to pivot to online sales.
And one of the private equity firms that took down Toys R Us was Bain Capital. Bain is a firm co-founded by Mitt Romney, previously the Massachusetts governor, 2012 nominee for president and currently the Utah Junior Senator.
ToysRus had an online presence for years. They were even at one time the exclusive toy supplier for Amazon back in the early 2000s and they were on eBay. They were too slow to ship, didn't focus online, and weren't cheap enough for Amazon but it's not like they never were online.
Yet another reason to see MSM more as PR firms than news outlets.
Toys R Us I believe was profitable before interest up until the end. It's just they couldn't service the massive interest so bankruptcy was better for them.
The thing with Taylor Swift is yet another reason why copyright law needs to be rewritten. Only people should be able to hold copyrights, copyright should last a fixed term (25 years at the very most), and there should be a 'use it or lose it' rule where the copyright is lost if the copyright holder isn't making the work readily available.
Yes, but there are already "use it or lose it" rules and they are completely worthless since the studios, labels, etc. will just make trash and give it the smallest release and attention to keep the rights. For examples please see Captain America and Fantastic Four versions from the 90s, the funniest examples of avoiding said rules, Captain America's helmet has fake ears.
@@eleSDSU Those movies weren't made for retaining copyrights, they were made to retain the movie rights that then cash-strapped Marvel sold to 20th Century Fox. The contracts contained use-it-or-lose-it clauses that would have the rights revert back to Marvel should Fox fail to make movies with them. Of course with Disney's acquisition of both Marvel and 20th/21st Century Fox that all became moot and an MCU Fantastic Four movie is in the works.
We have that to move copyrighted works into the public domain. But that time frame is 95 years! Steamboat Willie just recently entered the public domain.
I disagree. The length should be shortened for sure, right now it's ridiculous. However why would you not be able to sell your copy-write?
@@juniorbitare3041 Selling copyrights almost invariably ends up going badly for the seller and the marketplace. Why should a copyright holder need to sell? They can grant a publisher permission to produce copies - on whatever terms are agreed - without giving up the copyright.
The thing is, these companies are agreeing to be sold to private equity. So, its a two way streak.
Private Equity buyout typically can become and pump and dump.
Sears used to have profit sharing in the 50's the vulture company that bought them loaded them up with debt and sold the stores off for pennies...terrible ending for a decent company.
Was pissed that my company was cutting corners in a highly regulated industry. Started investigating since we had recently been purchased. Owned by a private equity firm. I knew then that they were trying to make us look good in the short term (at the cost of the long term) to flip the company. I left and they were purchased again within a few months. Same shit is going down. Not nursing home/hospital but the same kinds of problems would result from cutting corners.
This Game of Companies u speak of has been going on since the late 90's. Tell me. What ever happened to BREAKING UP MONOPOLIES? Clear to see the Globalist massive takeover. Many scrambled to recoup a Proper source of income.in the 2000's. Many Good income workers scrambled and pushed into creatively opening businesses after the 2008 Crash. We Managed! We succeeded! Then The PLANDEMIC hit. ALL THESE people, people nearing retirement age, WERE INTENTIONALLY SHUT DOWN! AND stupid people stopped going outside from PROPIGATED MASS FEAR! PRAY SOMETHING BIG IS NEARING. 2023 WILL BE VERY INTERESTING! GOD IS GOOD! stand tall! Face truth and BE BRAVE!
Exact same thing happened where I used to work. They've been resold twice since I left 4 years ago.
Was this a medical device manufacturer
Absolutely right! JoAnn Fabrics was taken over in 2011 and the equity firm that bought them drove it right into the ground everything you said in your video happened at JoAnn's. They screwed full-time employs by reclassifying everyone's job and made a third of the full-time positions part time take or leave it. Continually cutting payroll hours on top of that every year to the point theft has gone through the roof some stores reporting 4% shrink or higher. I would be surprised if JoAnn fabric makes it through the year with out going bankrupt. There just aren't enough employs there to put product out on the sales floor.
If it weren't for the mostly friendly and dedicated old timers of the staff, I wouldn't ever shop there again.
That is just one company I can think of off the top of my head, that has been ruined by private equity. There needs to be federal regulation on these predatory capitalists, they are tanking our economy.
Holy $#!+. That explains why the local JoAnn's sucks so bad. Understaffed, always has a "now hiring" sign, but their website never has job openings. And their bathroom always stinks like no one ever cleans it.
Wow, sounds like it varied from store to store. The stores I am familiar with at least the staff tried to keep up, until about a year or so ago when the upper management attacked the full time staff again restructured the job titles again. After that the moral in the store was completely gone. Sears, JC Penny, how many other retailers are looking at such a bleak future because of such over sight and greed? I have seen many friendly faces of employees leave JoAnn's over the last year, they must know a lot more then they are letting on.
I was at a JoAnns yesterday. Your comment explains what happened to the store over the years. I just assumed everything went downhill with Covid, but things were getting bad long before the pandemic.
@@safrizzell Yep. Both of the stores near me I have shopped in the past have experienced the same stresses on the staff, cut backs to the point of break and beyond.
KMart / Sears/ Kay-bee toys ....the hit list goes on and on that they destroyed with these scams .
This is literally the plot line of a Sopranos episode called "Bust Out". Tony and the boys take over a sporting goods store. The owner started with bad gambling debts. They took over the store and used all his credit etc.
I see this happening not just in the US but outside of it as well in Central and Southern American countries. Some of these countries have leaders who will do anything to get American private equities to come over and say "It will grow businesses". The reality is that they won't and will be taken advantage of by the rich of the richest and lose a lot of services those countries need due to these tactics.
"Knife to chest merger" epic
This is the best TH-cam video I have seen in a long time. Private Equity has done a number on my Family and me a few times. The last time was in the middle of the pandemic and I was killing it at my work. It doesn't matter how good you are. Americans want to believe that you can work hard and be successful, but Private Equity completely kills that idea. You're ballast, whether or not your ship is sinking. The teacher at the end is the absolute best. I was raising my fist with her. Thanks for making this.
Ikr
Well said.
It’s a nice narrative but it makes zero sense when you actually think about it.
If private equity didn’t make money nobody would invest in it. Does anyone actually think the managers managing these pension funds are that stupid?
This is framed completely wrong. The point of PE funds isn’t to beat the stock market, it’s to be an alternative, meaning not correlated not necessarily better every single year
And these so called “hidden fees” aren’t hidden at all. They are well documented and easily discovered.
If teachers and nurses want their pensions invested differently they should talk to their employers and unions. It’s that simple.
There’s no conspiracy here. This is very misleading. Entertaining, but not completely or entirely true.
We would "torch and pitchforks," about this nonsense.
This is getting exceptionally out of hand
Completely kills that concept, except it doesn’t. If you aren’t a publicly traded company or are and control enough stock to control the board there is nothing private equity can do. Alternatively there are many many people who have become very wealthy by building businesses and selling them to PE firms. Yes, people at the lower levels aren’t going to make out well, but they aren’t going to be lighting the world on fire working for a wage anyway.
Reminds me of that line from six of crows. "I'm a businessman, Inej. You're a theif, Kaz. Like I said."
I work for an absolutely great company called installation service Technologies . The owner of the company sold out to a private Equity Firm and within one year the company closed. I literally went from having a great job to having no job when I moved to California even though I was promised one because the company was in the process of closing. IST was the biggest in the industry at the time and the company was destroyed in one year.
Something that is glossed over and not talked about, the people handing over pension money to these private equity funds. People are also paid a large some of money to oversee where large pension money is invested. Why are they also not being held accountable? Are they also getting a kickback for handing over teachers retirement money to shady equity firms?
Sum of money
Everyone wants to be the next Bernie Madoff
Well said!!
@Nicholas Time that wasn’t the question..
Who's actually saying OK to put money into PE? Where was Taylor's manager? Where were the finance people for toys r us etc? Seems a bunch incompetent people in businesses to fall for PE takeover.
Such a pleasant surprise to see Adam Conover on this channel
I repair and help rather than sale ! But also look for long term clients rather than a one time deal, very skillful
Subs make me full
This has to be Adam's dad, right?? Nobody likes Con-over. Honestly, I'm surprised his dad doesn't hate him
Me too, always wondered what happened to Adam ruins everything
I feel like his one evening with a pre out Abbie Thorne may have slowly brought him back to the internet.
That's my fan theory, anyway.
@@TheDarkstarSyndicate LOL. That failure that is the current Joe? LOL
This happened to Albertsons. Everything Adam said happens happened to them. I saw it all first hand. I told the boss of my new job after I was laid off that I will quit if I ever I ever hear they sold themselves off to PE.
It seems that More Perfect Union is what Second Thought moonlights as when they're not busy being a tankie apologist.
Is there even ONE major problem locally or internationally that is NOT caused, directly or indirectly, by the corporate system? I can't think of one.
Only crime a person is allowed [by the government] to commit is white collar crime.
earthquakes? really can't think of anything else lol
@@snmrrw well apprently climate change can impact small earthquakes so they can kinda be
Very well stated!
@@SamanthaBartonYAY Yep, the melting of the ice caps has caused a decrease in the downward pressure exerted on tectonic plates, allowing the plates to shift more easily, which leads to earthquakes. Also, in a more localized sense, fracking often directly leads to small earthquakes. It's been happening a lot in West Texas in the past couple of years, actually. That area never used to have earthquakes - it's not near any fault lines - but there have been dozens of small earthquakes in recent years because of the fracking.
Don't let politicians tell you regulations are bad. No regulations is how you get superfund sites.
I will always find it strange when someone in government says 'let us have no power here....'
"Politician behaving Sus here!"
No Regs is also how you get Predatory Lending.
@@pktdbgnzwl
Borrow....and you'll die. 🙄
We got sold off a couple of years ago ( large soda firm) , now we run the same business but without repairs to machines ( squeezing the profit)..we shall see how long we shall survive.
Oh Adam I love you! Lifespan termination agreement 😂😂. These criminals are so good at marketing that the authorities don't even realize that they are criminals!
I have seen firsthand how private equity kills businesses, because I used to work for Kmart.
Kmart was bought out by Sears Holding Company in a leveraged buyout, and they cannibalized the company while I worked there. In particular, the electronic department, once one of Kmart and Sears' signature departments, was destroyed. Oh, they blamed online sales and digital game markets, but when they stopped shipping games and consoles, I knew they were sabotaging us.
Then they moved in appliances to that area. Then they started a lease-to-own scheme that was poorly explained and didn't even work (and that targeted lower-income folks who weren't wise enough to realize how much of a scam they were). They spent no money on basic upkeep and upgrades; the cash registers were the same ones used at the Kmart I worked at's previous location in the '90s, just running only slightly less out-of-date software (and the machines crashed almost daily).
It was no surprise when that Kmart died, except in that it lasted longer than I thought it would. It outlived Kmarts in larger cities, and the only reason for that is because there wasn't a Walmart or Target in town. (But there *were* Walmart Supercenters 20 miles away in either direction.)
My wife’s father worked many years at K-Mart corporate and when he retired they took away his pension money.
@@AllenFreemanMediaGuru Wow - how did they get buy with that?😡 I hate it when a regular hardworking American gets the shaft.
Eddie Lampert from Goldman sachs bought them as a real estate play. He was not interested in making a good store, he wanted to sell the assets piece by piece.
I'm surprised this didn't cover how local newspapers are being hollowed out, and what damage that does to public discourse, accountability and ultimately democracy.
I think Adam did a video on that. Might check his channel
Do you still have a subscription to your local paper? If yes then you are in a minority.
Thanks for mentioning this. In North Carolina, I have to go look for outside the state news to know about what's going on in here. The press pretty much is owned by people who don't want us to know.
Billionaires do not want democracy. They want total control. They want world domination.
"When your entire economy is based on extracting value from the bits around producing a good or service rather than extracting value from the good or service itself, everything becomes impossibly expensive." - Gareth Dennis (paraphrased and reworded for clarity)
Lifespan termination agreement! Knife to chest merger 😂😂😂 This is George Carlin level 👍 Just need some four letter words and you're there! Although, you missed an opportunity to reference the Bob's #OfficeSpace
The business loan sharks that work like payday loans include OnDeck - they literally charge $4000 on a $5000 loan...so you borrow $5000 and have to pay back $9000. How does that help a small business?
Omg
Bro if a business owner is stupid enough to take on a loan with such massive amounts of interest, then they deserve to go bankrupt.
That's why these assessments are like the Mob.
It doesn’t it’s usury and loan shark infiltration.
Desperate people make poor decisions.
Also people don’t understand how interest is computed.
To think that I just finished watching a video [w/ Jon Stewart talking] about stocks and learned how evil hedge fund managers are, now I just learned about another evil in the form of private equities.
These guys may be worse.
But we need both as much as we need Lyme disease.
I hope these guys burn in hell for thousands of millions of years
wish finance is being taught in highschool. The kids these days with access to tools and ability to organize outside of class, can probably come up with some ingenious solutions. Wanting to organize anything while still having to work the 9-5 makes it tremendously difficult. they got us by the ba**s
@@maxwell4431 I used to teach an economics class for elementary school students. Gotta get them started young.
9 year old kids get really invested into their toy money, and nothing teaches them faster than when you take that money through predatory loans or other scams. They always came back the next week knowing "I'm not going to do that again..." At the very least they now know there is no such thing as free money.
But then got the hell out of Shanghai, because the government locked us all inside for 75 days... Not the safest place to be a foreign teacher anymore.
@@maxwell4431 school is getting less and less funding every year, that's why no one has critical thinking skills in the us, the primary goal isn't to educate, it's to create workers, and they can lie about history in the process
@@maxwell4431 From what I can tell, the kids these days do have a proposed solution, and it’s a pretty good one: Get rid of capitalism.
Super happy Adam is teaming up with More Perfect Union. This is great!
"Hi, I'm Adam Conover and this is Private Equity Ruins Everything"
Thanks for bringing this to light. Just another example of flat out greed. And again, as a society we've placed and glorified being wealthy, rich, etc. and all that we're told that it should mean. Insane.
Why else do you think greed is one of the _seven deadly sins?_
Bring back Nobless Oblige basically with great power comes great responsibility. Be worth your worth
We gotta TAKE THE POWER BACK! I just looked up whether my employer was owned by a private equity firm, and 😌*sigh of relief*, they turned down an offer this spring!
Thank goodness, because I actually like my job for once and am getting paid decently for my work.
where do you work
Makes sense that it isn’t owned by PE then
Nope. You will never get the power back. You have your anger aimed at the corrupt businessmen when it is the corrupt government that protects them. When the businessmen are removed, the corrupt government will remain to cover for the next billionaire that wants to extract your wealth. And you will attack the businessman all over again so the cycle can continue.
Absolutely you should know who you work for. I won't work for one of those again, twice I have been caught in as a company has been sold off to private equity, it reined both companies for the employees. If your looking for a job make sure that it's not private equity owned.
We need this channel. Adam covers issues that are so consequential for all of us. The powers that be use Cultural Wars to distract us from heavy and important issues like this.
completely correct assessment
AS AN ASIDE - If you are selling a company to a larger company NEVER allow the contract to write in earn outs based upon the future profitability of the company UNLESS you have control of the corp finances until the end of the earnout period.
If you are doing business with the company buying you out, MAKE SURE they do not reduce the internal transaction price between the two companies IF you are on an EARN OUT SCHEDULE!!!
THIS HAPPENED TO SOMEONE I ADVISED NOT TO ALLOW THE CLAUSE IN THE CONTRACT, he lost control of internal transaction prices and the new owners shifted the profits to another company they owned and thus "profitability" of this business declined and the company did not pay over 1.5mm in earn outs my client was due over the ensuing 18 months.
Adam ruins private equity
The scariest thing i have heard in a long time is private equaty firms like blackrock funding and influencing AI ethics research in the leading universities.
I worry about the ones buying up new middle class houses by the thousands directly from builders - then renting them out. The average American cannot afford to buy in some cities - but will get stuck with Blackrock as their landlord.🤬
Well Blackrock is not really a private equity company. However Blackstone is.
What ethics?
This is one of the best videos I have seen yet. I actually learned something. I only wish that there were references to his conclusions.
I think it’s very interesting how Adam has come to be like the spokesperson for the working class
For years I got Architectural Digest. In the 90s homes featured were owned by those who actually made things. By the 2000s it switched to homes owned by hedge fund and private equity. Having had a relative who worked at TWA where Carl Icahn took an iconic company and ran it into the ground for its pension and planes, I knew the trend I saw wasn’t good
Buyout of America by Josh Kosman laid this out really well, in esp horrifying detail as it relates to healthcare
Could you link this ill try but im afraid ill loose you.
adam you look like youre losing sleep over this - bro your eyes are dyin
The dogs and the retirement homes was convincing. However, if Taylor Swift suffered... 😂😂😂
I worked at a retailer - Maplin Electronics (UK) - and saw all this happen first hand.
I hadn't watched this vid at the time because it was many years ago, I had little understanding of financial systems, politics, stocks, equity, etc. But even then, I saw through it.
I remember saying to colleagues hang on so Montague (the private equity firm) took out a loan to buy Maplin, and they would pay back (capital and interest) that loan with profits from Maplin, and the security on the loan is Maplin (assets).
How is that ok!? They're basically taking a business in very good condition and plunging it into million pounds of debt with no benefit to the business, and without putting anything in themselves or taking any risks themselves.
And sure enough over the next decade roughly we saw the initial boom as it was very profitable at the time, which they used to fuel unsustainable growth in order to sell the company for more than they bought it, then when it all caught up with them (it had changed hands by this time to another private equity firm) and went out of business they blamed competition from ecommerce, the recession, and various other excuses. The real reason - being screwed over by private equity owners and being run by incompetent managers - was swept under the rug.
Ah, but you see, the whole conversation about risks and rewards in capitalism is bullshit. Rich people simply are prevented from ever having risks.
@@VeteranVandal Absolutely! You nailed it with that one. From government bailouts to investing in secret structures like PE firms, they are guaranteed to not have to invest or risk their own money but reap all the financial windfall of other people’s life savings and life long work.
This is nothing less than a crime. It should be stamped out and punitive tax laws need to be bought in to claw back
the money taken buy these crooks. The individuals who engineer this fraud have to be held to account . They mustn’t be allowed to hide behind an unjust law.
The problem is the crooked politicians in bed with these guys
Maybe you shouldn't just believe everything this guy says
@@TheSoonToBePurgedJackMeHoff55 for real, this guy is wrong far more often than he's right, watch any of the debates he's been in and he folds every time.
@@TheSoonToBePurgedJackMeHoff55- Do you have any counter to what he says? Evidence that this is _not_ how private equity firms operate?
@@angercatalyst- Show us how private-equity firms do _not_ destroy companies, then.
The long ago robber barons are back with a vengeance ! Very good video. Thanks.
People think private equity naturally creates quality and good wages through market forces but instead it sacrifices those things to maximizie profit.
Adam, the real issue here isn't the organizations doing the buyouts; it's the "supposed" top ranking executives and board members of these companies being bought out who are at fault. If your company is doing well, then why are you voting to take the buyout/loan? These private equity firms can't make you take the loan, the company and/ or the shareholders vote for it. Thank you for the educational moment as people ought to k ow that the purchased company can say no. The problem hurting these businesses is that everyone wants immediate returns (instant gratification). If top execs could look actually 5 - 10 years out, they'd probably vote "no" on these buyouts, but instead everyone looks at the quarters and annuals.
The problem is that capital gains have supplanted dividends as a means of profiting from an investment. A leveraged buyout is *extremely* lucrative for the shareholders, as the PE firm can afford to inflate the price. Conversely, refusing such a buyout might lead to a revolt from shareholders hoping for a piece of the action, and tossing out execs until they find someone who *will* approve the deal.
This won't change until we get The Money out of politics. The Money won't allow anything to change here.
That is exactly correct. Citizens United must be reversed.
Politics has been bought and sold since Richard Nixon was compromised.
Won't happen because politics is about money
Can't do that under the present system.
Wow, we still have Toys R Us, Hertz & Baskin Robbins in Canada but lost Target, Linen's & Things to name a few.
❤ Have a a Rocky Road cone for me. I miss Baskin Robbins.
Target? I worked for Target in Corporate Offices in Minneapolis, MN 2008-2009. As far as I know they are still a privately held company.
Do you still have Bed Bath & Beyond, Pier 1 Imports?
Thank u for this information. Well done
I'm really not sure how a governmental solution exists to this problem, when Adam just got done explaining why our lawmakers won't do anything about private equity.
How about not funding them blindly. Warren Buffett will not. You head in the video what he said.
Since Blackstone is a Private Equity Firm, I assume they used these methods to become the largest landlords in America. I don't mind screwing over landlords, but I don't need more corporate consolidation.
Iirc, that occurred after the 2008 crash. All those defaulted mortgages meant they cleaned up.
Try and screw Kushner, Donald or Blackstone and see what happens. But thieves like you, always pray on the weak.
@@noodletropic ah yes. Go and admire these capitalists and their pathetic companies. Don't notice when they come for your house too
Adam did a pretty horrifying video on Blackstone, as well.
@@grmpEqweer And covid.
I think we are too obsessed about the economy crashing. In the right sense, the economy never crashes. It just undergoes cycles, and almost always recovers. So I really don't care what the predictions are. I just want to grow my portfolio. I read that people are pulling in massive profits despite the downturn. Any tips on how they do it?
I think it's the professionals and those who use their services that are really pulling in the big money right now. There are really advisors that can help you achieve very consistent growth. I have a friend who pulled in more than $194k profit within three months. So you just have to make some research and get one who fits your fin-goal.
The market will always recover. The goal is to find quality stocks with long term potential. It's hard for the average Joe to do this, because it involves following a lot of industry news, following up with earnings, etc. It's easier to invest through an advisor who knows how stuff works, and make rocket returns.
Investing in quality stocks with long-term potential is a good strategy, but it can be challenging for the average person to do this on their own. Keeping up with industry news and earnings can be time-consuming and difficult. That's why it's easier to work with an advisor who can help you make informed decisions and potentially achieve high returns.
@@hasede-lg9hj Well if isn’t that the hard truth…this investment-adviser that guides you must really on to something…who is he?
It’s a She actually, Vivian Carol Gioia I initially came across her on a CNBC news report then on smartadvisors and I decided to hit her up. Best decision I made to stay afloat 2020.
Thank you
Great reporting !!!!
They also buy companies that have lots of stores or locations that are valuable for lease to franchisees and when they get the business in a bad place they sell the most vauable pieces off to pay down debt AFTER making sure to pay themselves with bonuses and fees and well what do you know it doesn't lower the debt any. Also income is reduced and they have an excuse to lay off more people to pay down debts/reduce overhead and wait.... that's gone too.
“The actual investors in these funds aren’t billionaires; they’re people who actually matter.” 😂
Savage AF and I am here for it.
No one in government gives a shit ,there getting paid with free health care.
Why do the companies sell to private equity firms?
It's called falling for a scam.
Because they have the money and lots of it
I hate Black Rock and black stone and hope they go under or become black pebble
The teachers union and nurses unions have all lost money on their retirement funds because of private equity. Private Equity invested huge amounts of money into commercial and residential properties and we all know what is happening with those properties since the interest rates have risen and people have been unable to pay mortgages. Bankruptcies!!!! So you will lose your house and BlackRock and Blackstone will go in and pick up that real estate for pennies on the dollar. These private Equity businesses are owned by the 1% billionaires
Scammy Sammy bankman-fried wanted to become the first trillionaire
This guy earned the channel my subscription. So funny and informative lol.
You're digging a tiny bit of the finance world, but you could sum it up in a very single way : There is four way for investement firm to "beat the market" : 1 - Being good at gambling and/or finding undervalued companies (it's doesn't happen) 2 - Creating monopoly/sizing up companies until the economy of scale raise their benefit (Not great on the long run and it's harder to do since the market have been hugely consolidated already) 3 - Buying a struggling/underperforming company and restructurating it (This one can be good and performant, but it require a very skilled investor, not just a bunch of banker) and finally, the one we mosly see 4 - 5 to 10 years squeezing strategy : Buying a company which basic are strong enough to keep running even you squeeze the hell out of it, slowly destroying it in the process, and selling it before the crack show to a sucker or to the general stock market
Ah, capitalism. Where "profit motive" dictates nothing related to enhancing the human experience, it's merely a side effect.
Four ways are the best ways!
@@EpicMiniMeatwadyet this side effect is much better than socialism.. that is how powerful freedom is.
@@lukazupie7220 One day murican will make the difference between socialism and communism I hope. One day.
@@dorianodet8064 they are one and the same. Real capitalism has never been tried before so you never see how amazing it truly is.
it's awesome to see this channel grow
th-cam.com/video/6G3nWyoQ5CQ/w-d-xo.html
Not fast enough IMO
Send this video to each congressman and senator, create a new set of laws to prevent and dismantle private equity firms
Congress people are "on the take."
Thanks for this (horrifying), but necessary info!!!
The paradigm is now corporations versus people for control of the government .
Great video!
I am stunned. I had no idea such things were possible. I will be contacting my financial advisor next week to see where these firms are and if I have any connection to them in my portfolio. Thank you.
Were you able to extract your portfolio from PE firms?
Very little PE Exposure in retail investing.
I’d say the chances are 100% that your money is invested in funds managed by Black Rock. They are into everything.
Pro-tip, you dont. Generally these guys are in PRIVATE market. Hence the name. So if you are dealing with typical advisor, you are not gaining exposure to any private equities...
Advisor? Be careful.
Private equity firms must be tightly regulated to avoid these horrors.
This has been going on for a while. The old Wall Street movie in the 80’s was a good illustration, but artists have been seeking their rights for a looong time.
I worked for 3 companies over 10 yrs but my office never moved. 2 LBOs. I was the last man out the door after selling off the minor assets and failing to find a buyer for the building. The last of these companies was a fortune 500 Co that had paid consistent dividends for 65 yrs. It went bankrupt.
So infuriating and so information packed, thank you.
Truly a very important video...wish more people would watch it.
We lost V&D retail chain to a private equity company here in the Netherlands. After that the law was changed to never have that happen again. Alsoo AKZO was a target but our ministyer of economics and the managers of AKZO just didn't return any correspondance or phone calls.
I used to work for a sports retail store that seems to be growing across the nation. It used to be a good place to work in terms of stress level. It even offered 401k contributions and PTO to part timers, something unheard of anywhere. But once the company went public and listed on the stock market, things began to change. It didn’t lay anyone off, but when people left, they didn’t fill that position so they could squeeze as much work as they could from as few as possible, all for boosting their stock profits by cutting costs.
I love this channel eye opener and I'm not surprised in regards to private equity all of it creative terms to rip u off quietly
It is literally a zero risk game they’ve created for themselves. It’s incredible that this is legal what so ever.
Best ducking content on the net, that I’ve come across anyway. Thank you Adam. I’m sorry to say but-it’s organizing time. Someone is going to have to direct the forces that are building. It’s been 45 years since I read Violent Neighbors and it’s gotten so much worse, which is hard to comprehend. Thank you for doing this. I’m ready for the kinetic phase, myself.
Things will not get better until article 1, paragraph 1, clause 1, line 1 of the law is "Don't believe rich peoples' bullshit."