Saturday, January 17, 2026

The Private Equity Playbook Part 4: The Cost 110 Bankruptcies in 2024, 20,150 Deaths in Nursing Homes, 18% Wage Cuts After 3 Years, 10x Higher Bankruptcy Risk—The Complete Accounting of What Private Equity Has Taken From America

The Private Equity Playbook Part 4: The Cost

The Private Equity Playbook Part 4: The Cost

110 Bankruptcies in 2024, 20,150 Deaths in Nursing Homes, 18% Wage Cuts After 3 Years, 10x Higher Bankruptcy Risk—The Complete Accounting of What Private Equity Has Taken From America

In 2024, there were 110 private equity-backed bankruptcies—the highest number on record. PE-backed companies accounted for 11% of all bankruptcies despite PE owning only 6.5% of the economy. In the first quarter of 2025, 70% of large bankruptcies (those with more than $1 billion in liabilities) were PE-backed companies. Academic research shows PE-owned companies are 10 times more likely to go bankrupt than comparable non-PE companies. When they do go bankrupt, jobs disappear: studies document 4.4% job losses within two years of a PE buyout, rising to 13% for public-to-private deals. Workers who lose their jobs see wages fall 18% within three years. Those who stay see minimal wage growth. But job losses and wage cuts are just part of the cost. We've already documented 20,150 deaths in PE-owned nursing homes and a 13.4% increase in emergency room deaths at PE-owned hospitals. We've shown how PE landlords evict tenants at 5-6 times the rate of small landlords, how rents increased 45% at mobile home parks, and how families were displaced from homes they'd lived in for decades. This is Part 4: the complete accounting. We're aggregating the damage across every sector—retail, healthcare, housing, and more. We're showing the total jobs lost, the total wealth extracted, the total communities destroyed. And we're proving this isn't bad luck or market forces. This is systemic extraction by design.

The Bankruptcy Crisis: 2024-2025

The Numbers

According to Axios analysis of bankruptcy data, 2024 was the worst year on record for PE-backed bankruptcies:

PE-BACKED BANKRUPTCIES (2024-2025):

2024 TOTAL:
• 110 PE-backed bankruptcies (highest on record)
• 15% increase from 2023 (96 bankruptcies)
• 11% of ALL bankruptcies were PE-backed
• PE owns only 6.5% of the economy

LARGE BANKRUPTCIES:
• Q1 2025: 70% of large bankruptcies (>$1B liabilities) were PE-backed
• 2024: 54% of large bankruptcies were PE-backed

HEALTHCARE:
• 21% of healthcare bankruptcies in 2024 were PE-backed

COMPARATIVE RISK:
• PE companies 10x more likely to go bankrupt (CFA Institute)
• PE companies 2x more likely to default on debt (Strömberg 2008)

Let that sink in: PE owns 6.5% of the economy but causes 11% of bankruptcies. In large bankruptcies—those exceeding $1 billion in liabilities—PE's share jumps to 54-70%.

This isn't random. This is the playbook: load companies with unsustainable debt, extract fees, exit before collapse.

Major 2024 Bankruptcies

Some of the largest PE-backed bankruptcies in 2024 included:

99 Cents Only Stores: 10,800 jobs lost, 371 stores closed
Prospect Medical Holdings: Hospital chain serving vulnerable communities
Joann Craft Stores: Second bankruptcy in one year
Forever 21: Retail collapse
H-Food Holdings: Food service company

Each bankruptcy represents thousands of jobs lost, communities without services, creditors unpaid, and workers left with nothing.

Why PE Companies Go Bankrupt More

The academic evidence is clear. A CFA Institute study found PE-backed companies are approximately 10 times more likely to go bankrupt than comparable non-PE companies.

Why? Because of leverage.

Remember the Toys R Us numbers: $7.6 billion in debt on a $6.6 billion acquisition. That's 5.8:1 debt-to-equity. The company was paying $400 million per year in interest—more than its entire operating loss.

When you load a company with that much debt, any economic shock can trigger bankruptcy. A bad quarter. A missed holiday sales target. A supplier demanding cash upfront. The debt leaves no margin for error.

And PE firms know this. They extract fees upfront—transaction fees, management fees, advisory fees—so they profit even if the company fails.

The Job Losses: Millions of Workers

The Academic Evidence

A 2019 Harvard and University of Chicago study analyzed employment at thousands of PE-backed companies. The findings:

JOB LOSSES AFTER PE BUYOUTS:

OVERALL:
• 4.4% job loss within 2 years of buyout
• Losses concentrated in first 2 years post-acquisition

BY DEAL TYPE:
• Public-to-Private Buyouts: 13% job loss
• Divisional Carveouts: 16% job loss
• Private-to-Private: Minimal job loss

INTERNATIONAL COMPARISON:
• Germany: 12% job loss after PE buyout (Antoni et al. 2019)

CURRENT EMPLOYMENT:
• 11.7 million workers at PE-owned companies (2020)
• Up from 8.8 million (2018)
• Growth from buying MORE companies, not creating jobs

The 4.4% average masks significant variation. Public companies taken private by PE see 13% job losses. When PE firms buy divisions from larger companies (carveouts), job losses reach 16%.

And critically: the study found that PE firms don't create jobs—they buy existing companies and cut employment. The increase from 8.8 million to 11.7 million workers reflects PE buying more companies, not employment growth at existing companies.

Toys R Us in Context

The 33,000 jobs lost at Toys R Us weren't an outlier. They were typical.

When 99 Cents Only closed 371 stores in 2024, 10,800 workers lost jobs. When Gymboree went bankrupt (also PE-backed), thousands more. When Payless Shoes collapsed (PE-backed), 16,000 jobs gone.

Each bankruptcy follows the same pattern: load with debt, extract fees, cut costs, collapse. Workers bear the cost.

The Wage Cuts: 18% Loss After 3 Years

What Happens to Workers Who Lose Jobs

Job losses are devastating. But what happens to workers who get laid off from PE-backed companies?

The Harvard/UChicago study tracked workers over time and found that workers displaced from PE-owned firms experience severe wage losses:

WAGE LOSSES FOR DISPLACED WORKERS:

YEAR 1: 10% wage loss
YEAR 3: 18% wage loss
LONG-TERM: Losses persist for years

WHO BEARS THE COST:
• Workers who LEAVE PE firms (voluntarily or not) see massive losses
• Workers who STAY see minimal wage changes
• Workers who can't find new jobs bear the worst losses

AVERAGE ACROSS ALL WORKERS:
• 1.7% wage decrease overall
• But this masks 18% losses for those who leave

This is critical: the average wage change is only -1.7% because it includes workers who stayed at the PE-owned company. But workers who lost their jobs—whether through layoffs or because conditions became unbearable—saw wages fall 10% in the first year and 18% by year three.

These aren't temporary setbacks. These are permanent income losses. A worker making $50,000 who loses 18% sees their income drop to $41,000. Over a career, that's hundreds of thousands of dollars in lost earnings.

Why Wages Fall

When PE-backed companies lay off workers, those workers often can't find equivalent jobs. Why?

Skill mismatch: A Toys R Us manager's retail experience may not transfer to other industries
Local labor markets: If PE bought all the major employers in a sector/region, there are fewer options
Age discrimination: Older workers laid off struggle to find new jobs
Recession timing: Many PE bankruptcies cluster during economic downturns

The result: displaced workers take lower-paying jobs, work part-time, or leave the workforce entirely.

The Death Toll: Tens of Thousands

Healthcare Deaths (From Part 2)

We've already documented the healthcare mortality data in Part 2, but it bears repeating in this accounting:

DOCUMENTED DEATHS FROM PE HEALTHCARE OWNERSHIP:

NURSING HOMES (2005-2017):
• 20,150 additional deaths
• 10% mortality increase after PE acquisition
• 1,680 deaths per year average
• Caused by: 3% staffing cuts, 50% increase in antipsychotic drug use

HOSPITALS (RECENT STUDIES):
• 13.4% increase in ER deaths after PE acquisition
• 7 additional deaths per 10,000 ER visits
• 25% increase in hospital-acquired complications
• 38% increase in bloodstream infections

TOTAL: Tens of thousands of preventable deaths

These aren't projections. These are peer-reviewed academic studies with control groups, controlling for patient health status and facility characteristics.

20,150 people died in nursing homes because PE firms cut nursing staff to service debt and extract fees.

Emergency room deaths increased 13.4% because PE firms cut ER and ICU staffing.

These deaths are the direct result of the playbook: load with debt, cut costs, extract fees.

The Housing Crisis: Millions Displaced

Evictions and Rent Burden (From Part 3)

We documented the housing data in Part 3, but here's the summary for the total accounting:

PE HOUSING EXTRACTION:

OWNERSHIP:
• 300,000+ single-family homes
• 2.2 million apartment units (10% of US apartments)
• 1,800+ mobile home parks (200,000+ residents)

RENT INCREASES:
• 10% per year at Invitation Homes (double market rate)
• 45% at mobile home parks over decade
• Individual cases: $1,850 to $3,000 in 4 years

EVICTIONS:
• 8% more likely at PE single-family homes (Atlanta)
• 5-6x more likely at PE single-family homes (Las Vegas)
• 40% increase at PE mobile home parks (Florida)
• 3x increase at PE apartments (Toronto)

QUALITY DECLINE:
• Mold, sewage backups, vermin infestations
• Repair requests unfulfilled for months
• Infrastructure deterioration

Housing is different from retail or even healthcare because it's the foundation of everything else. When families are evicted, children change schools. Communities are disrupted. Savings are depleted. Instability cascades.

And unlike retail bankruptcies (where workers lose jobs but stores can reopen), when PE displaces families from housing, those families often can't find affordable alternatives. The damage is permanent.

The Wealth Extracted: Trillions

The Fee Structure

We've shown specific examples throughout this series:

Toys R Us: $470 million in fees (2005-2017)
Invitation Homes: Blackstone made $1.7 billion (2012-2019)
Plaza Del Rey mobile home park: Carlyle made $87 million in 4 years

But what's the total across the entire PE industry?

TOTAL PE ASSETS UNDER MANAGEMENT:

GLOBAL:
• $5+ trillion in assets (2024)
• 12 million+ workers employed by PE-owned companies (US)
• 30,000+ companies owned globally

FEE STRUCTURE:
• 2% annual management fee on $5 trillion = $100 billion/year
• 20% carried interest on profits
• Transaction fees every time debt is added
• Advisory fees charged to portfolio companies

ESTIMATED ANNUAL EXTRACTION:
• $100+ billion in management fees alone
• Additional billions in transaction fees, advisory fees, dividends
• Much of this coming from debt-loaded companies that later fail

The 2% management fee on $5 trillion in assets equals $100 billion per year in guaranteed income to PE firms—regardless of whether their investments succeed or fail.

And that doesn't include carried interest (20% of profits), transaction fees (charged every time a company borrows more), or advisory fees (like the $15 million/year Toys R Us paid).

Where Does This Money Come From?

The fees don't come from thin air. They come from:

Workers: Wage cuts, job losses, reduced benefits
Customers: Price increases, quality decline, reduced services
Patients: Surprise medical bills, staffing cuts, increased mortality
Tenants: Rent increases, evictions, deferred maintenance
Creditors: Unpaid debts when companies go bankrupt
Taxpayers: Lost tax revenue from interest deductions and carried interest loophole

This is extraction. Wealth is transferred from workers, customers, patients, and tenants to PE firms and their investors.

The Systemic Pattern

It's Not Bad Luck

Across every sector we've examined—retail, healthcare, housing—the pattern is identical:

THE PLAYBOOK (SUMMARY):

STEP 1: BUY WITH DEBT
• 60-80% leverage (sometimes more)
• Company pays the debt, not PE firm

STEP 2: EXTRACT FEES
• Management fees (2% annually)
• Transaction fees (every time debt is added)
• Advisory fees (charged to portfolio companies)

STEP 3: CUT COSTS
• Retail: Staff cuts, store closures
• Healthcare: Nursing cuts, quality decline
• Housing: Deferred maintenance, mass evictions

STEP 4: INCREASE PRICES
• Retail: Prices up to maintain margins
• Healthcare: Surprise billing, higher costs
• Housing: Rent increases 40-100%

STEP 5: EXIT
• IPO (take public, cash out)
• Sale to another PE firm
• Dividend recapitalization (borrow more, pay yourself)
• Bankruptcy (walk away, creditors absorb losses)

RESULT:
• PE firms profit from fees regardless of outcome
• Workers lose jobs and wages
• Customers/patients/tenants pay more for less
• Communities lose essential services
• Taxpayers subsidize through tax advantages

The Numbers Don't Lie

The evidence is overwhelming:

PE companies are 10x more likely to go bankrupt
PE buyouts result in 4.4-16% job losses
Displaced workers see 18% wage cuts within 3 years
PE nursing homes have 10% higher mortality (20,150 deaths)
PE hospitals have 13.4% higher ER deaths
PE landlords evict at 5-6x higher rates
PE mobile home parks raise rents 45% while trapping residents

This isn't a few bad actors. This is systemic extraction by design.

Who Pays?

Workers

33,000 jobs lost at Toys R Us alone
10,800 jobs lost at 99 Cents Only (2024)
Millions of jobs lost across all PE bankruptcies
18% wage cuts for displaced workers
Lost pensions, lost severance, lost benefits

Patients

20,150 deaths in nursing homes (documented)
Thousands more from increased ER deaths
Surprise medical bills reaching six figures
Communities losing hospitals and emergency access

Tenants

Rent increases of 40-100%
Evictions at 5-6x normal rates
Families displaced after decades
Mobile home residents trapped (can't afford to move)

Communities

60,000+ people lost ER access when Steward hospitals closed
Small towns lost only toy store when Toys R Us collapsed
Neighborhoods destabilized by mass evictions
Essential services disappear when PE-backed companies fail

Creditors and Taxpayers

Creditors unpaid when debt-loaded companies go bankrupt
Taxpayers lose revenue from interest deductions (companies deduct debt interest)
Taxpayers lose revenue from carried interest loophole (Part 5 will detail this)
Government agencies (Fannie Mae) provide subsidized loans to PE firms

In 2024 alone, 110 PE-backed companies went bankrupt—11% of all bankruptcies from firms that own just 6.5% of the economy. Those bankruptcies cost tens of thousands of jobs, left creditors unpaid, and destroyed communities. But that's just one year. Over the past two decades, private equity has bought 30,000+ companies, loaded them with $5+ trillion in debt, extracted hundreds of billions in fees, and left millions of workers worse off. We've documented 20,150 deaths in nursing homes, 13.4% higher ER mortality at hospitals, 18% wage losses for displaced workers, and eviction rates 5-6x higher than small landlords. This is the cost. Not the cost of "creative destruction" or "market forces." The cost of a specific business model: leveraged buyouts that load companies with unsustainable debt, extract fees upfront, cut costs to service that debt, and exit before the collapse. In Part 5, we'll show you why this is legal. We'll explain the carried interest loophole—how PE partners pay 20% tax on billions in income while teachers pay 22% on $60,000. We'll document the lobbying machine that kills every reform attempt. And we'll show you exactly how much this costs taxpayers: $18 billion over 10 years, benefiting roughly 3,000 people. The destruction is systemic. The tax advantage is intentional. And the lobbying ensures it never changes.

NEXT IN THE SERIES: Part 5 examines the carried interest loophole—the tax advantage that lets private equity partners pay 20% tax on billions in income while workers pay higher rates on far less. We'll show how PE firms have spent $100+ million lobbying to protect this loophole, how every reform attempt since 2007 has failed, and why even Donald Trump (who campaigned on ending it) and Democrats (who wrote bills to close it) couldn't kill it. The playbook extracts wealth. The loophole protects the extraction. And the lobbying ensures nothing changes. This is how the system is rigged.

Sources & Further Reading

Disclaimer: This article aggregates data from peer-reviewed academic studies, federal bankruptcy records, and investigative journalism. Statistical claims regarding bankruptcy rates, job losses, wage changes, and mortality are sourced to specific published research. Financial figures are drawn from public filings and credible news sources. This is educational content synthesizing published research, not financial, legal, or investment advice.

the gipster

Saturday, January 17, 2026