Bad Company

Megan Greenwell, a journalist and former editor in chief of the digital sports magazine Deadspin, opens with her own experience: In 2019, Boston-based private equity firm Great Hill Partners acquired Deadspin, micromanaged the newsroom, ignored the audience, and drove the staff to resign. Great Hill later sold the site to a Maltese gambling company while climbing a ranking of top-performing midsize firms. Greenwell's loss prompted her to investigate how private equity functions across the economy. She defines the industry's structure: Firms pool outside capital to buy companies, profiting through management fees, tax advantages, and asset sales whether the acquired companies succeed or fail. Firms typically borrow most of the purchase price in the acquired company's name, making the company legally responsible for repayment. Research shows that 20 percent of private equity-acquired companies enter bankruptcy within ten years, compared to two percent of other companies. With $8.2 trillion in assets and roughly 12 million American workers in its portfolio companies, the industry controls hospitals, daycare chains, newspapers, apartment complexes, and more. Greenwell frames the book around four people whose lives were upended when private equity firms acquired the businesses they depended on.

The first is Liz Marin, a member of the Tlingit people of southeastern Alaska. After a childhood marked by family trauma and her mother's death, Liz married Henry Marin, a Colombian immigrant, and needed a flexible job while he attended pharmacy school. Toys R Us met every requirement. Greenwell traces the chain from founder Charles Lazarus, who turned a Washington, D.C., baby furniture store into the dominant American toy retailer. Walmart undercut Toys R Us's prices in the 1980s, and Amazon entered the toy market in 1999. In 2005, private equity firms KKR and Bain Capital, along with real estate firm Vornado Realty Trust, acquired Toys R Us for $6.6 billion, borrowing more than $5 billion in the company's name.

The second subject is Roger Gose, born in 1939 in Texas, whose uncle's career as a small-town physician inspired him to pursue rural medicine. After medical school and service as an Air Force flight surgeon, he settled in Riverton, Wyoming, a town of roughly 10,000 near the Wind River Reservation. Greenwell recounts how the local hospital passed from a county-funded nonprofit to the Hospital Corporation of America (HCA), a for-profit chain that later paid a $1.7 billion fraud fine. HCA spun off its rural hospitals into a company called LifePoint. In 2018, private equity firm Apollo Global Management bought LifePoint for $5.6 billion, with 89 percent funded by loans.

The third subject is Natalia Contreras, born in 1989 in Tampico, Mexico, who moved to Corpus Christi, Texas, in eighth grade without speaking English. Both her parents had been journalists at a progressive newspaper whose staff struck over wages in 1981 before the owners locked them out permanently. A registrar at her community college steered Natalia toward journalism, and Professor Robert Muilenburg taught her the fundamentals. She interned at the Corpus Christi Caller-Times, dropped out of university, and was arrested for drunk driving before returning to the Caller-Times full-time. Greenwell traces how the newspaper industry's failure to adapt to the internet made papers targets for consolidation. The Caller-Times, then owned by E.W. Scripps, a newspaper company, passed to Gannett, the nation's largest newspaper chain, in 2015.

The fourth subject is Loren DePina, born in 1980 in Boston to Cape Verdean immigrants. After years of unstable employment, she and her husband Rashad Jackson were laid off in 2019 and moved into public housing in Alexandria, Virginia, where her confrontation with drug dealers launched her career as a community organizer. Greenwell explains how the 2008 financial crisis opened residential real estate to private equity, as firms used government-backed loans to acquire apartment complexes at scale. In 2020, CIM Group, a Los Angeles-based private equity firm, paid $506 million for Southern Towers, a 2,346-unit complex in Alexandria. In early 2023, Loren's family moved in, seeing it as their dream home.

The book's second part tracks what happens under private equity ownership. At Toys R Us, between 80 and 120 percent of annual earnings went to interest on the $5 billion acquisition debt, and a sale-leaseback deal forced the company to pay rent on properties it once owned. In September 2017, the company filed for bankruptcy, and by March 2018 lenders voted to liquidate all 735 U.S. stores, laying off 33,000 workers with no severance while executives collected $16 million in bonuses. Analysis of filings showed both KKR and Bain earned more from fees over 12 years than they invested.

At SageWest, the merged Riverton-Lander hospital, obstetrics services were suspended in Riverton in 2016 and permanently closed two years later. The inpatient mental health unit also closed, and staff dropped nearly 40 percent. A confidential presentation Roger later obtained revealed LifePoint had planned these closures from the start. In 2021, Apollo sold LifePoint to another of its own funds, netting $1.6 billion in profit.

At Gannett, now merged with GateHouse Media, the combined company took on $1.79 billion in loans from Apollo at 11.5 percent interest; by the end of 2022, its U.S. workforce had been cut from more than 24,000 to 11,200. At Southern Towers, CIM filed 541 eviction proceedings in its first eight months. Building code violations jumped from two before CIM's purchase to 185 afterward. In October 2023, Loren's apartment flooded, with maintenance arriving nearly 48 hours later. CIM posted violation notices citing clutter displaced by the flood and alleged cannabis use, then declined to renew the family's lease. The family left in March 2024.

The book's third part follows each subject's response. Liz joined Rise Up Retail, a nonprofit that pressured pension fund boards on behalf of laid-off workers. Minnesota's $93 billion pension board paused new KKR investments, and KKR and Bain agreed to contribute $20 million total to a hardship fund, far less than owed but nearly unprecedented. Roger, along with Vivian Watkins, a longtime Riverton resident and former U.S. Bank lending executive who had known Roger for decades, concluded that negotiating with LifePoint was futile and launched a campaign to build a community-owned hospital. A feasibility study from Stroudwater Associates, a rural health-care consultancy, confirmed viability. After years of bureaucracy, the United States Department of Agriculture awarded a $37.2 million low-interest loan. Combined with state and local funding, the group raised $54 million; construction began in December 2024.

Natalia left Gannett for Votebeat, a nonprofit newsroom covering election administration, becoming the only full-time reporter covering voting in Texas. Greenwell notes that no single approach will replace what private equity has destroyed in local news. Loren continued organizing from outside Southern Towers, working with tenant advocacy group African Communities Together to pressure CIM through Virginia's U.S. senators and the Federal Housing Finance Agency, which oversees the government-sponsored mortgage lender Freddie Mac. In July 2024, the agency announced modest tenant protections but declined to require good-cause eviction provisions, which would limit evictions to specified justified reasons.

In a concluding chapter, Greenwell describes the 2024 bankruptcy of Steward Health Care, a 33-hospital chain whose former private equity owner, Cerberus Capital Management, made $800 million for investors while hospitals in eight states faced closure. She argues that private equity has destroyed the equal-information precondition underlying free-market theory: Workers often do not know who owns their employer or whether the company is being driven toward bankruptcy. Polling shows 71 percent of Americans consider wealth inequality a serious national issue, and just 32 percent of Republicans and 26 percent of Democrats believe large corporations have a positive effect on the country. The industry's rapid expansion, Greenwell writes, has created a growing number of people who recognize the threat and are beginning to fight back.