How Private Equity Killed the American Dream

Its new Book, Bad Agency: Death of Private Equity and American DreamsJournalists and wired ex Megan Greenwell One of the most powerful of modern American capitalism but the weak burdens describes the history of the destructive effects of the forces. Flush with cash, basically uncontrollable, and relentlessly concentrate toward profit, Private equity agencies From healthcare to retail, large industries are quietly re -shape the US economy – often leave their waking financial destruction.

Greenwell wrote or about 8 percent of the total population in the United States, twelve million people now work for private equity owned companies. The story of these four is focused on the story of these four, one of which is “toys” and “US supervisor who lost his best work and a WiMing doctor who saw the services required to his rural hospital. A fierce detail of how their collective experiences are being replaced by financial engineering and the way the shifts are being provided by everyone except the people at the top.

A review Bad agency On behalf of Bloomberg, the long -standing private equity executive Greenwell is unavoidably accused of finding tragic stories “Sad endThe “But Greenwell chosen characters are not only the American dreams are being eroded because of the destruction of their communities, but also the portrait of people who are using creative techniques to return.

Greenwell talked about what private equity with wired last month and not, how it transforms various industries and what the workers are doing to restore their power.

This interview has been edited for precision and length.

Wired: What is Private Equity? How is the business model different from Venture Capital?

Megan Greenwell: People always confuse the capital of personal equity and initiative, but it is completely reasonable that ordinary people do not understand the difference. Basically, the easiest way to explain the difference is that the capital’s capital companies usually invest in startups. They are basically taking part in the company and are expecting some types of return over time. They are usually playing significantly longer than private equity.

However, the way the private equity works, especially with leverage bayouts, which I focus on the book, they are buying companies directly. In Venture Capital, you have put your money inside, you are giving it to a CEO and you probably have a board seat. However, in the leverage bayout model, the private equity firm is truly the owner and controller of the portfolio company.

How does private equity companies define success? What kind of company or business is attractive to them?

In Venture Capital, the VCSs only think that the company is evaluating a deal based on the company that is going to be successful. They are looking for unicorn. Is this company going to be the next Uber? Private equity is trying to make money from companies in a way that does not really require a company to make money. It’s like the biggest thing.

So it is less of a gambling.

It is very difficult to lose money in deals for private equity companies. They are getting 2 percent management fees, even if they are running the company to the ground. They are also able to remove all these strategies, such as selling the company’s real estate and then charged the company’s rent on the same land owned. When private equity companies accept loans to buy companies, the Loans is allotted not to the Debt Private Equity Farm but to the portfolio company.