Plunder: Private Equity's Plan to Pillage America

by Brendan Ballou

The authoritative exposé of private equity: what it is, how it kills businesses and jobs, how the government helps, and how we stop it

Private equity surrounds us. Firms like Blackstone, Carlyle, and KKR are among the largest employers in America and hold assets that rival those of small countries. Yet few understand what these firms are or how they work.

In Plunder, Brendan Ballou explains how private equity has reshaped American business by raising prices, reducing quality, cutting jobs, and shifting resources from productive to unproductive parts of the economy. Ballou vividly illustrates how many private equity firms buy up retailers, medical practices, prison services, nursing-home chains, and mobile-home parks, among other businesses, using little of their own money to do it and avoiding debt and liability for their actions. Forced to take on huge debts and pay extractive fees, companies purchased by private equity firms are often left bankrupt, or shells of their former selves, with consequences to communities that long depended on them.

Perhaps most startling is Ballou’s insight into how this is happening with the active support of various arms of the government. But, as Ballou reveals in an agenda for reigning in the industry, private equity can be stopped from wreaking further havoc.
 

Genres: Nonfiction, Economics, Business, Finance, Politics, Audiobook, History

Audiobook

First published June 27, 2023

About the author

Brendan Ballou is a federal prosecutor and served as Special Counsel for Private Equity in the Justice Department's Antitrust Division. Previously, he worked in private practice, and before that, in the National Security Division of the Justice Department, where he advised the White House on counterterrorism and other policies. He graduated from Columbia University and Stanford Law School.

Reviews

[Khan · Rating 5 out of 5]

Being poor in America is increasingly like being the only woman at a frat house party. Where every corner lies an opaque interaction that results in you being taken advantage of. Laws are being rewritten, lobbyist surround our politicians like vultures circling a carcass and the nations wealthiest elite design complex political structures to funnel hundreds of millions to defeat laws that threaten the status quo. No industry represents this more than private equity does. The fall of capitalism will most likely come from the agency problem represented in the last 40 years. Where the risks of individuals have been shouldered onto the tax payer rather than the individual taking the risk. Over the last 40 years we have seen an explosion in corporate power which represents more of an extraction period rather than an innovation period. This is not to downplay any advances but shine a light on how these businesses are run. Capitalism has shifted away from what its ideological framework operates as. Business coming into fruition to meet a societal need and engaging in competition with other businesses to win over potential customers. The theory is that we should award the individual founder(s) for the risk they took, eliminate the regulation in place so they can easily move to compete in that market. Because they made that risk to start a business they should also be taxed at a lower rate and a host of other advantages. The thinking is that this will 'stimulate the economy' and the gains from these entrepreneurs will resemble a rising tide which will "lift all boats". Perhaps this is exactly how the system is to work, one wonders if capitalism itself is a trojan horse for oligarchy?

This is obviously a flawed view, we saw this in 2008 in when the government stepped in and bailed out bankers who moved their personal risks onto the tax payers as they bankrupted their companies. They were made whole and no one went to jail. This introduces the agency problem, I will argue in this review why private equity firms are this on steroids but first we have to establish some facts. Today's version of capitalism is not actually capitalism. In every market we see the same phenomenon, 3-4 big players that all offer shitty service like healthcare, cable/internet providers, meat producers etc. They all raise their prices in tandem, reduce their customer service and consolidate each part of the market. This results in price gouging, lack of any competition since buyers have no other choice. They're forced to make a choice rather than wanting to make a choice. These mega corporations know this, so they cut their staff, raise prices, lowering both quality and industry standards. Private equity pushes this to its limits. We're living in a time where no corporations actually want capitalism or the "Free market". They want corporate socialism and they want to create complex laws designed to mitigate any competitors, they want 0 anti trust laws to be enforced and they want mega mergers approved.

We established some basic facts which you may find agreeable or disagreeable at this point in the review. I didn't go that far in depth so if your skeptical of my claims. That's okay, I would be too at this point, lets jump into what private equity is and then I can further hammer these points out.

Private equity are firms made of people who have never actually started or ran their own business that actually sells a product in itself. It's made of MBA's, finance and business grads from elite institutions who often times have impeccable credentials(credentials are not as real as you think but thats something for another time) and come from elite backgrounds. What private equity does is buy businesses who're profitable in some cases and in other cases who might not be. What they do is buy the company with complex debt structures where they put next to nothing of their own money down, they then can take the company and begin a series of catastrophic movies. Here is the core playbook.

- They immediately cut the workforce

- Cut benefits for the workers (Mostly blue collar, rarely white collar)

- If the company owns its own infrastructure, buildings, warehouses etc. They will sell those properties to pay back the debt they paid the company for. Then they force the business itself to pay the loans and interest on the property as its being rented out and not owned. As a business owner, why would you add additional expenses to your bottom line? Well if you're not the founder and you don't care about the long term viability of the company. You can strip all assets and sell for parts.

- Next they have a recapitalization fee. This is a fancy way of saying "We're going to use the companies assets to pay us a hefty fee". Basically we bought the company with debt and now we're going to give ourselves a payday with the assets from the company for no reason. Think about using your credit card to pay yourself, that's essentially it.

- Next they also charge the business fees for managing the company. Not only do they own the equity in the company, they can also charge fees to run the company. Imagine the founder of a company charging the company to run the company? This is not a salary. Usually the founder is paid in options. Private equity gets both

- Next they just flat out cut costs by using shitty materials even if it damages their relationship with the customers. Equity firms that owned hospitals were using crappy needles that broke inside of the patient, even when they were told about the needles. They still didn't care. Short term gains vs long term gains. This is the agency problem at play here.

When the business goes bankrupt, they give the workers nothing. Absolutely nothing. Forgo their pensions etc. Lots of times these are still profitable businesses but PE fills them up with debt to the point where its interest payments exceed revenue/profit etc. They then put the company through bankruptcy and liquidate it.

Lets go through some stories, a nursing home (These are exceptionally profitable businesses) owned by a private equity firm, made cuts to the workforce. This resulted in the elderly not being able to receive the care they needed, one woman who needed assistance to walk, fell one night and slammed her head. She would vomit and show signs of being concussed. The nursing home did nothing, blood swelled in her head, her family saw this and took her to the ER. Where she died, the family then tried to sue the private equity firm but because of the complex financial engineering. They didn't "own" the company, they simply "advised" the company. I don't know what the fuck that means since they are in fact controlling the company. Never the less the family tried to sue the company but received nothing because it was going through bankruptcy and all the assets were liquidated. This is a common pattern in with PE firms. There is corporate veil that is impossible to penetrate when wrong doing has occurred let alone restitution for the victim(s).

You may think this is some crazy one off anecdote but that would be wrong. Private equity firms are in the top 10 employers in the country. They're some of the most powerful institutions in corporate America. They own business that you might have grown up with and loved only to see them disappear. You might have thought "Maybe they got crushed by the e-commerce wave". This is not entirely true, a lot of PE firms shake every penny out of consumers while offering a low quality of service. Damaging the brands reputation and customer base. They're there for short term gains. PE fans will say 'there are a lot of PE firms that invest long term". This not representative of the field itself. I have never seen more predatory businesses such as pay day loan lenders tricking individuals into loans that turn into debt bombs, renting houses to people where they're not accountable for any wrong doing. One tenant complained of black mold and the PE firm did nothing to clean it because they owned all the property in the area, they knew consumers had no other choice. This is antithetical to capitalism. There are so many stories, I can't type them all without my fingers numbing and possibly falling off.

We talk about the gilded age but we never mention the grifter age. This is the prime era of grifters. Many of the leaders of these firms are multi billionaires despite a track record that resembles destruction. Stripping business of their value and throwing them into a liquidation process allows them to take no risk, allows them to essentially put people in harms way and then they appear on some terrible financial show like CNBC and talk about "How to be successful", the ethics they learned from their life lessons. Preaching the importance of capitalism while lobbying to destroy it behind closed doors. This is the agency problem at heart where the risk is never brought onto them, few if any cases are won by David(customer) vs Goliath(PE) when suing PE firms. You should bear the risks for your investments not place them onto someone else. This is what will most likely bring capitalism down. Since PE used purely debt to buy companies thanks to interest rates being at 0% for 15 years. It created an economic environment where they could make purchases with debt that are highly leveraged, to then buy companies they do not understand how to run.

They're getting crushed due to the rapid rise of interest rates. Look for them to talk about getting a bailout, this is already happening in the commercial real estate sector where vacancies due to remote work are causing a 1 trillion debt doomsday for some of these companies. I fear they will be bailed out with no repercussions for the risks they engaged in. Not to mention the sick game they play. They will use the fact they have hundred of thousands of employees to ask for a bailout but fire these same employees and forgo any severance. Then get on an interview and talk about why capitalism needs to be "Protected". This is the type of corporate behavior leads to populism. Look for future ambitious political operatives use this situation to gain power.


This is the grifter age where making a lot of money will allow you to get cultural importance regardless of how you made that money. A great read, 5 stars. I am genuinely concerned for the future of democracy when these firms are able to operate the way they do without any repercussions of being held accountable for their aggressive practices in slashing costs that can have life and death consequences.

[Sunny Lu · Rating 4 out of 5]

Death to private equity

[Stitching Ghost · Rating 5 out of 5]

Very readable and extremely well researched/documented.

The language used in this book is pretty accessible so even if you're not familiar with the language of private equity/finances you should be able to understand what is being talked about without issues.

Through most of the book Ballou painstakingly details how the life of people are being influenced, sometimes to a ruinous or deadly extent by private equity's effort to monetize and profit from an ever-increasing number of aspects of day-to-day life often at the expense of any form of perennity or safety. I was especially impressed with the segment regarding seemingly successful businesses (Payless Shoe Source, Toy R Us…) driven into the ground by the extraction model of profit generation.

Through the different "industries" affected we can see how many activist groups such as tenant rights groups, patients' right groups and even prisoners' rights groups) could stand to benefit in working in tandem with each other to push for better regulations of private equity firms.

This book is both an exposé and a call to action, while a lot of similar work will leave the reader with a sense of inescapable impending doom with this one we are left with a pretty defined suggested path forward which includes all level of actors from the citizen activist to the lawmaker. This part in particular was a breath of fresh air.

People who are familiar with my reviews know that I love me a book with a lot of footnotes and references and this book made me very happy on that front.

I received an eARC of this book through NetGalley in exchange for an honest review.

[Lauren D'Souza · Rating 4 out of 5]

An incredibly well-researched book that provides thorough details on an industry that affects the lives of Americans so deeply, yet is secretive and not well understood by the public. I know firsthand how little information is available on PE transactions, fund and holding company structures, PE investors, and transaction structures, and I'm so impressed with the level of detail the author was able to get into in this book. It could not have been easy!

Ballou first provides a concise overview of how PE firms and deals typically work, when PE first came on the scene, and who funds PE transactions. He then goes into detail on six major industries where PE has, over the past few decades, made drastic changes – often for the worse for the companies that get acquired, its employees, its customers, and other non-financial stakeholders. The industries he covers are housing, retail, nursing homes, health care, finance, and prisons – these chapters are quite depressing, as Ballou spends a lot of time on the human cost of these transactions, such as elderly nursing home residents who get grossly mistreated because of the time and money squeezed out of nursing home staff in the name of "operational efficiencies" or prison inmates who are basically put into modern-day slavery and nickel-and-dimed out of every basic necessity with no one to whistleblow since they are a "captive audience."

Ballou then covers how the justice system, Congress, and local governments aid and abet PE deals, made particularly egregious because all of these institutions are NOT given a fiduciary duty – they are supposed to be protecting constituents who are usually the ones most negatively impacted by private equity. And yet, these institutions are ones that ease regulation, find loopholes, and otherwise avoid anything that could jeopardize the PE titans that donate millions of dollars to campaigns every election cycle.

Finally, Ballou presents very concrete recommendations for what we can do to fix this. I really appreciated how he drew parallels with where we're at now - with many interconnected environmental, social, and political crises with few signs of things getting better - to other similar periods in history. Although there were some bleak comparisons (e.g., the US in 2023 could be like Germany in 1933...), he hopes that the US in 2023 will end up being like the US in 1903. Although this was a notoriously horrific time for the majority of Americans: child labor, Black codes, voter suppression, mass worker deaths, no labor regulations, the growth of the elite class, robber barons, and more, it was the catalyst for Grange and Progressive reforms that give us some of the labor freedoms we have now, from weekends to eight hour days to child labor laws to freedom of association and more. The last chapter of the book outlines real, actionable things that we can do now to help get us to an inflection point where things will finally start looking up and benefitting people.

My one criticism of the book is that Ballou doesn't quite cover what makes PE attractive from a logical standpoint. From the way he describes the business model, actions, outcomes, and actors, it all seems like pure evil. Why would any investor want to participate in this? (OK, the cynical answer could be merely about returns, but is that really it?) More importantly, why would any company want to be acquired by PE? (Same answer, that they're struggling financially and don't have any other recourse?) I know that the vast majority of PE is extractive, but I also know that it's not all like that. He provides one example of PE gone right early in the book, and I would have liked to see that a little more, so that we can take a look at how firms and funds can do better within this existing business model. But perhaps Ballou's response is that they simply can't.

Thank you to Public Affairs for the ARC via Netgalley!

[Melanie · Rating 4 out of 5]

This book reminds me a lot of Monopolized by David Dayen, except with more creative financial and legal instruments. Corporate raiders reduce competition while making themselves rich and impoverishing many others. I definitely recommend reading it if you've noticed that your healthcare options have gotten dodgier, if you notice more vacant retail spaces, or if you've noticed how stupidly expensive single-family houses have become, even with these unpleasantly high interest rates.

Despite looking fat, this book is only about 250 pages of text and another 100+ of sources/citations. It took me awhile to get through because I was become viscerally angry while reading it. The book is about how some self-proclaimed geniuses buy up businesses, loot them for their assets, load them down with debt, and kill them off, all in the name of "greater efficiency," (and also because these guys generally suck at running businesses). I hadn't really been aware of this particular method of business until Toys "R" Us was killed off a few years back, but it has seeped into healthcare and housing and retail and other economic sectors that have become increasingly unaffordable to use over the past decade. These companies create absolutely ludicrous corporate structures in order to avoid liability for mistakes, and often find ways to dump pension obligations on the government, and creatively use bankruptcy to avoid paying out on the rare judgment that goes against them. Naturally, politicians look the other way, either because they're too senile/stupid to understand what's going on or they're looking for a piece of the action themselves.

I almost skipped the chapter on prison tactics because I don't know anyone in jail, but it was instructive on how the poorest and most captive audiences are made victim to these exploitative schemes, not unlike people living in trailer parks or nursing homes. And how allowing policies on price-gouging for prison phone calls, for example, can expand into the wider economy.

Anyway, at the end, he provides a call to action, largely focused on states' rights, since Congress is too senile/corrupt to act, though I'm honestly curious how he felt about states' rights a few short years ago when there was much pearl-clutching about covid restrictions. Author is never entirely overt about his political positions (as there are any number of knuckleheads responsible for this nonsense throughout the political system) but he does fret about climate change and gun control, so he likely doesn't care about states' rights on those issues. Also, he has a laundry list of tasks that other government departments could engage in, from closing certain tax loopholes and setting certain requirements for nursing homes and other direct recipients of federal funds. These things wouldn't solve all the problems, but would likely rein in the worst of the abuses.

[Deiana Hristov · Rating 4 out of 5]

Before I was like fuck private equity but now I’m like FUCK private equity. Incredibly clear and well researched, with examples and cases that made me have to stop reading and take several deep breaths. Would not recommend as a chill beach read

[Emily · Rating 5 out of 5]

Shocking news, unregulated capitalism does not promote the free market. Instead, it creates oligopolies and a plutocracy ran by corporations and politicians in the pocket of private equity firms. This book does a great job exposing how private equity firms have wrecked home ownership, prisons, medical care, and higher education for the working class and low-income people. We are watching the middle class wither as the wealth gap grows. The scariest part of all of this is how closely it mirrors Germany's economy in the 1930s. Will this cause a democratic collapse enabled by the corporate elite? While private equity firms are not the only issue, they are a large part of why we see less jobs, lower pay, worse healthcare, and poorly made products. The last chapter gives ideas for solutions, but these aren't actions you can take individually.
I did find this cool website though that shows which politicians are taking money from private equity firms.
I don't recommend reading this if you are already burnout about the economy, inflation rates, the job market, or the upcoming election lol

[Jason P · Rating 4 out of 5]

This book is enraging - simply put. It’s horrific to see how private equity has had a hand in transferring wealth from the poorest people in the US to the wealthiest - and it made me wonder about the role of private equity here in Canada in - say - the bankruptcy of clothing stores and The Bay or the increasing conglomeration of dental practices. That’s to say nothing of the nursing and funeral home industries and the contracting out of government services. Sadly - the most depressing part was the last chapter of the book, where the author lists a bunch of things government can do to reverse the trend. Nearly all of them are things the Trump administration has acted to make impossible.

[Ryan P · Rating 3 out of 5]

I always recommend seeking information from a bias-confirming point of view and a counter-bias point of view (whichever you prefer). I work closely to this industry (as an accountant) and will try to provide some counter arguments below. I did think this was a good book to raise awareness of the negative impacts that PE can have and the government’s compliance/assistance.

My main gripe with the book is that the author blames PE for widespread industry changes. Blames PE firms for 13% rent increase nationwide for single family homes - apartment complexes rose far more. Blames PE firms for high COVID death rates in nursing homes - well documented that this concentrated in states that forced nursing homes to lock down (effectively trapping residents with the virus inside).

Author shows lack of understanding of some PE basics, in that it is fundamentally incorrect that a PE firm would ever seek to lose money on a deal. Also, the 1/5 PE-backed companies bankruptcy stat is driven by the fact that a primary strategy of these PE firms is to buy up “distressed assets” which are companies nearing bankruptcy or in-bankruptcy. They take the risk on turning those around which makes it much likelier that their holdings go bankrupt.

The “dividend recapitalization” in a PE deal is very similar to real estate. The firm puts money in (more than 20% typically) and finds a creditor to supply the debt. The creditor provides money on a “leverage” basis similar to debt to income basis for mortgages. Once a company becomes more profitable, the leverage goes down. If the PE firm would rather not sell the company yet, but would like to re-up the cap table in order for a liquidity event for all shareholders, they can do a dividend recapitalization which conceptually is EXACTLY the same as cash-out refinance on a home (taking out a new loan on the updated value of the asset, keeping the equity gain immediately). The examples in the book are egregious and should be illegal - I think the 2 year hold proposal makes a lot of sense.

Hold periods “short term mindset” - in reality, the value proposition of a PE firm is that they will lock up investor money for 5-7 years in order to make outsized returns. They are incentivized to make extremely quick changes to result in more growth. However, how is it at all different from publicly traded companies? It is well documented that executive goals are narrowly focused on short-term incentives and performance. The daily reminder of the stock prices drives that point home for many CEOs.

Author makes good points on PE’s harmful impact on residential real estate, nursing homes, and for-profit universities. Not sure what solution is for real estate, maybe making a maximum % of investor owned single family homes in a county? Nursing homes should have mandated nurse to patient ratios (this should be law for all healthcare).

On the carried interest law - the argument in favor of this is that the PE associates receive effectively equity in the firm’s holdings (usually on a mandated basis). It really does act like an investment in my opinion. If the earnings on those investments is treated as ordinary income, I think you’d need to get rid of the capital gains rates as a whole? Again could look at hedge funds - they get capital gains treatment since they are publicly traded securities.

Corporate veil - PE firms are not held accountable for actions of their portfolio companies (companies they own). If you pierce the corporate veil here, I think it would hurt more small business owners who make an LLC to avoid being sued personally. The corporate veil is a key tailwind to American entrepreneurship. I do agree that PE firms should be held more accountable for actions taken via the portfolio companies, but the solution is more nuanced than the author details.

[Josh Eversole · Rating 4 out of 5]

This was a really tough read. Not cause it wasn't a good book, but because it was really good at ruining my mood. As someone who knew "private equity bad" but not much more, learning more about the specific ways private equity is making money at the expense of the lower and middle class was harrowing to me. I'm still shocked buying a company and forcing them to take out a plan to pay you back for your investment is legal. But ofc they're very good at lobbying (the Congress chapter was the worst to read). TL;DR: a lot of things are wrong in America, and a lot of it is (at least partially) private equity's fault

[Julia Rap · Rating 4 out of 5]

Wooooww this is well researched. It’s repetitive at times, but it’s a necessary redundancy because private equity’s terrors are THAT dominant and far-reaching. Really hard to read at times, especially when documenting the truly horrific conditions of private equity owned prisons and nursing homes.

First book I’ve read on privatization/corporatism that had highly specific action steps both for the individual and government. Incredibly refreshing and exciting to read. It’s not radical but it feels legit. We engineered this mess which means we can fix it!!!! Most poignant moments for me were discussions w Americans who had fallen victim and I wish we had more of that. Not one to quote in a goodreads review but this is too good:

“‘What they thought was that people who live here are stupid, and that’s the way they treated us,’ a former employee of Payless ShoeSource told the NYT… ‘it didn’t matter how great you were in your field, or what other stuff you had done, it was ‘You live in Kansas, so you’re an idiot.’’ This arrogance— forged in business school, sharpened by industry conferences and it’s own propaganda— allows private equity to convince the world, and perhaps itself, that it really is a ‘superior form of capitalism’ and disguise the ways it really makes its money.”

[Emily · Rating 5 out of 5]

This book is a must read for everyone. Enlightening and horrifying how devastating the effects of PE “investments” can be (in the setting of a lack of regulation and lack of morals) and how widespread the impact is in society. The last section is a bit repetitive and slow but otherwise a great read.

[James · Rating 3 out of 5]

This is one of those books with a really important message and that I agree with, but simply isn't a good time to read. The majority of this book is just numerous examples of the extreme greed of private equity. Personally, I think this would have been more interesting and kept me more engaged as a documentary rather than a full book.

[Mike Merrill · Rating 2 out of 5]

the narrator of the audiobook was melodramatic (maybe the book was as well?) and i went into this agreeing that private equity is mostly bad, but i came out almost wanting to defend the industry because the book is so one sided.

[Sabastian Hunt · Rating 5 out of 5]

Synopsis/Summary: Holy shit! If you already didn’t like capitalism, you’re going to really despise it after reading this book. I’m someone who literally carries around a card in my wallet reading “Capitalist” - a card I got at Warren Buffett’s annual shareholder conference - but even I found myself thinking that if the type of behavior in this book is permitted and widespread under capitalism then it’s time for a rethink of everything. This book is written by a former? DOJ lawyer and it acquaints readers with private equity firms, what they are and how they work and don’t work, the common tactics they use, etc. The author dedicates a chapter to each major industry PE has plundered: single family homes, payday lending, private debt, nursing homes, jail and prison services, ER and hospital, retail, insurance, for profit colleges, utilities, etc. In short, companies you remember from childhood which have went out of business are probably PE’s victims: Shopko, Sears, Payless, Toys R Us and many more. The book argues that the short term focus of private equity combined with their managerial ineptitude and regulatory capture and general lack of moral compass end up making economic inequality and products/services worse - threatening a repeat of the Great Recession. Here are some of the lowlights of private equity that make you question if their leaders have consciences: 20,000 estimated early nursing home deaths occurred over a 12 year period at private equity owned nursing homes according to one study; when a PE owned firm had a prison communications contract they put in a clause saying that if a prison had their video chat services then in person visits were not allowed to have in person visitors; several stories of PE acquiring a firm and then financially mismanaging it to the point its pension becomes insolvent; forcing firms they acquire to sell off property and lease it back and to take on new debt which PE recoups as management and transaction fees and then getting the firm in such bad debt that it goes bankrupt then manipulating bankruptcy law to buy the firms assets back; they’ve been allowed to get away with the double standard of requiring customers use forced arbitration for claims brought against them while using the courts for claims against customers; they issue “prison release cards” which are essentially debit cards given to people released from jail and it has any money on it which they had when arrested or money put on their books while in jail and they charge fees to check balance, fees to use, fees for activity.

What I liked about book: I liked the organization of the book - the author had a little section specific to each of the major tools used by private equity and a chapter for each major industry. I learned a lot from this book. I have a bachelors in Econ and I read this genre - so I should be privy to the stuff in this book - but I found a huge amount of the content in this book to be eye opening and jaw dropping.

What I disliked about book: While the book is well organize it’s kinda poorly written and author at times comes off as a partisan hack sometimes taking cheap shots that make him lose credibility with me at least.

Concepts/ideas/facts introduced to me: if the portfolio companies of the top 3 PE firms were counted as a single employer, they’d be the 3rd, 4th and 5th largest US employers; 2 and 20 rule; there is a federal agency (PBGC) which guarantees underfunded pensions for workers; one studying estimated poor nursing home conditions due to PE buyouts has led to 20,000 premature deaths in 12 years( 3/6/3 sales; credit bids; alms houses; dividend recapitalization; there was an economics literacy class for judges which taught anti antitrust teachings which is thought to have a major impact on changing judicial outcomes on antitrust ; 90/10 rule; Regulation D market size eclipsed IPO market size in US; private equity firms are rapidly moving towards private credit; Private Equity Stakeholder Project;

Things this book made me understand better/deeper: why people hate capitalism so much.

Opinions changed/Disconfirmation: that change is almost always possible through legal means in America. I’ve heard about legal tactics and regulatory capture but hearing about everything at once and in such detail it makes me feel like justice is little more than a mirage.

Ideas I got while reading: it would be cool if there were a movement for home owners to add restrictive covenants to their houses which prevent them from being acquired by private equity; before a law is passed we need to hire the equivalent of paid hackers who can earn bounties for finding vulnerabilities or loopholes in the proposed new law.

Memorable quotes: “the biggest land grab since manifest destiny” - a private equity executive on the acquisition of single family homes.

Taking Action: check my investment portfolio to see if I’m funding private equity with marginal practices; get a book about the history of antitrust laws, read book about gilded age.

Chewing on/Food for thought: every set of legal codes can be exploited but the judicial system is not really set up to quickly adapt so at anytime there will be some amount of injustice you’re just stuck with. I once wrote an article about how groups like Black Lives Matter should bid for private prison contracts and I feel even stronger about that idea after hearing more about the absolutely morally bankrupt practices of the groups running prisons today.

Readings referenced(ones that come to mind): Others People’s Money and How The Bankers Use It.

Why I chose to read book: I listened to a podcast episode on Freakonomics where the author talked about his book. I’m reading it because I don’t know as much as I should about PE and I want to understand how their work and their impact on the economy as part of my unit of books to understand poverty better.

[Sara Stewart · Rating 5 out of 5]

I had a visceral reaction when reading this. Yet another example of how the ultra-wealthy control our government and lobby for their own interests at the expense of every other American :’) bright college students should read this before being seduced into working for private equity firms to know what they’re getting into.

Also, private equity belongs nowhere near healthcare, nursing homes, or prisons!!!!

[Joseph Wolf · Rating 4 out of 5]

Solid book illustrating the problematic tendencies of private equity and how it is converted into many of the problems in American society today. -1 star because it is somewhat long-winded (although you could also describe it as well researched) and because it acts like it is the sole fault of private equity when one of their businesses fails, ignoring other aspects of how businesses might have been struggling even before acquisition. That being said, I think the book is largely on the money. As a side note, I noticed some interesting parallels between the private equity playbook and how the Trump/Musk administration is trying to run the country. An outsider takes over a struggling company (or in this case economy), drastically cuts vital programs to maximize short-term profit (cutting taxes for big business allies) and claims legal immunity when innocent people are negatively affected.

[Braxton Kukulka · Rating 4 out of 5]

Pretty interesting take. I think great points are made in how PE uses legal structuring to bypass regulations and really take advantage of the government. Not sure how it’s even feasible to stop them but it’d be great to put some limits here to prevent complete destruction of consumer welfare.

[Ernest Liang · Rating 3 out of 5]

I wish I liked this more but it’s a tad dull to me unfortunately. Still important info to know!

[Scott Ward · Rating 4 out of 5]

Ballou brings a lot of experience and research to the mechanisms and effects of large private equity firms. Much of the book catalogs the incentives and the resulting problems for acquired companies and their employees—and in the field of healthcare, their patients/clients and families. At the end of the book (ironically, in Chapter 11) he gives solutions to prevent acquired enterprises’ bankruptcies and collapses. Some we can do but most that need regulatory and legislative efforts.

Though he painstakingly describes what’s happened in a few industries by the 800-pound gorillas of the private equity world (e.g. KKR, Blackstone), he attributes a lot of the consequences to malicious intent. I doubt this is the widespread case. Only insane people would sabotage their investment even if they’ve recovered their initial capital outlay. Also, reading this book, you’d think all private equity firms are “evil” and bad for companies, and society. Many investment firms are often prescribing to the hold, secure and grow acquisition model and then sell if the capital is needed elsewhere or there’s an obvious strategic buyer. Though Ballou highlights a few industries and regional markets where PE investments have been detrimental, many more industries have survived and thrived with PE infusions.

[Sara Broad · Rating 4 out of 5]

"Plunder" by Brendan Bailou is the most thorough, complete analysis of the scourge of private equity in America. Private equity firms essentially buy businesses to pilfer them of every cent that they can get their hands on and leave the business in ruin. Countless lives have been impacted by private equity's plunder of businesses in every industry. Whether it is through lost jobs, low quality medical care, or people dying in nursing homes, private equity's impacts on businesses impact us all. This book makes me nervous about how much further private equity will be allowed to proliferate without government regulation. I recommend this book!

[Morgan · Rating 5 out of 5]

Plunder is an informative and easy to read about private equity, their tactics, and what we can do to stop them. Ballou dives deep into their tactics in different industries, how they screw over workers, and avoid liability. Overall, I definitely recommend this to anyone who reads political/current events nonfiction.

[Maya · Rating 5 out of 5]

Long overdue review of this excellent (though infuriating) account of the dark side of the private equity industry. The bottom line? The basic business model of private equity firms leads to “a practice of extraction, rather than investment, of destruction, rather than creation.” We hear about “value creation” all the time, but how often does that really happen in private equity portfolio companies? The drive to cut costs and increase profits above all means that promoting the long-term sustainability of the business, its employees, and the people it is meant to serve is essentially impossible. Though these private equity firms are purposefully opaque, Brendan Ballou writes, “The industry is quite literally right in front of you. The font used in this book is owned and licensed by a private equity portfolio company.”

The pattern is strikingly obvious. First, private equity firms typically buy businesses only for the short term. Second, they often load up the companies they buy with debt and extract onerous fees—the “privilege” of being owned by these firms like Blackstone, KKR, Warburg Pincus, and others. And third, they insulate themselves from the consequences, both legal and financial, of their actions. In fairness, not every company owned by private equity firms goes bankrupt. But the “chance of disaster meaningfully increases under their ownership,” and there are countless examples across industries like healthcare, real estate, consumer goods, and more.

As a federal prosecutor and former Special Counsel for Private Equity in the DOJ’s Antitrust Division, Brendan Ballou knows what he’s talking about. Luckily for us, though, all hope is not lost. As he describes in the final section of the book, “Private equity is both a symptom and a cause of the problem. Though the basic logic of private equity made life worse for people who depended on running water, reliable ambulances, and affordable education, private equity only entered these businesses because governments chose to reduce their commitment to residents. For those who have pushed the philosophy that private industry in general—and private equity in particular—can always provide better and cheaper services than the government, these stories are a painful rebuttal. And for those of us who have lived with the consequences of that ideology, they show that we can demand that our governments do better… we can sue to stop private equity's predation in these industries. We can return the basic responsibilities of infrastructure and emergency services to our local governments. And we can demand that these services be affordable. That our governments once took on these responsibilities as a matter of course shows that, in fact, they can do so again.”

[Shanmei · Rating 5 out of 5]

Cool. I learned a lot! I did need to have a separate tab open on Google to search up terms I didn’t know, which I did extremely often, but that’s more a reflection of how poorly I performed in my college economics courses than a flaw of the book. I can tell that the author does try to dumb the subject matter down a bit to make it more coherent for laymen, but unfortunately for him I got a 49% on one of my finance midterms last semester... so a lot of this went over my head. But very interesting stuff. I liked how he gave a lot of recommendations for how to curtail the worst evils of private equity in the last chapter, although I think he is maybe a little too trusting that the American government will act in the best interest of their constituents. One small nitpick - I thought the chapters were organized a bit haphazardly. It skips around a lot between anecdotes, and there were some subjects that I wish he spent more time dwelling on. You can definitely tell that this is the author's first novel, there is a lot of redundancy between the chapters and it's not as frictionless as other nonfiction books I've read. I think this book could have used a second look by a different editor.

Plunder is a little clunky and disorderly, but shining bright above its slightly bewildering narrative structure is the author’s good heart and wildly over-optimistic hope that a more competent government could save America, which is endearing enough that you can almost believe it yourself. 9.5/10

[anna brandenberger]

extremely illuminating. everyone around me has been subjected my “i’m so depressed” a couple times a day because man. what in the fucked-up-corporate-legal-monstrosity have we allowed to infect and fester the very fabric of our society. great summary of how these PE firms’ short term flipping incentives grossly misalign with supposedly ‘improving’ the companies they buy. turns out stripping em of all assets, charging em exorbitant management fees, cutting every single corner and loading em up with debt doesn’t bode well for their long term success. surprise. (but it’s all ok, once my companies go bankrupt i can foist off all pension obligations to the state, and under 10 shell companies what lawsuit could possibly find me??)

extremely disheartening in light of the second trump admin doubling down on decisions the author hoped we could revert in ‘23.

some minor quibbles: the writing felt clunky / repetitive at points, and many citations were secondary sources (also a few broken links). but overall very well organized, very clear explanations of legal and financial ideas.

[Bryan Reina · Rating 5 out of 5]

I was already aware that private equity, as a whole, played a role in exacerbating some of the issues our country faces, such as rising healthcare costs, declining government services, and widespread layoffs. However, this book shed even more light on the extensive influence wielded by the industry. It was eye-opening, albeit disheartening, to realize just how much sway they hold over our elected officials and how easily they can silence opposition with the help of powerful law firms. I believe this book should be required reading for many Americans. It emphasizes that the true battle isn't between left and right, but rather between the average American and the unchecked power of private equity. I'm hopeful that Brendan's message will resonate and inspire more people to take notice and, importantly, take action to rein in the excessive power of private equity firms.

[Hannah T · Rating 5 out of 5]

A really excellent, terrifying look at private equity’s wholesale capture of the American economy; extremely unnerving and eye-opening. The stories of various industries are told really well, and focus on specific people and families affected by private equity’s buying up of prisons, nursing homes, medical practices, etc.

Though the facts within are scary, Ballou does a really good job of striking a note of optimism - I thought the last two chapters, which laid out specific action items for a variety of Departments, levels of government, activists, etc. were really excellent, and showed that there’s still hope, if we work for it.

My one small critique is that the book can sometimes get a bit technical - but I think that’s hard to avoid with a book on this subject (also keeping in mind that I have zero background in finance or economics). Overall, the information is conveyed in a pretty accessible way, and the book is very readable.

[Alex Stevens · Rating 5 out of 5]

Should be required reading for anyone curious to better understand the term “late-stage capitalism.”

Areas of particular concern: Pension laundering via abuse of the bankruptcy process; the Trump administration’s granting 401k manager access to private equity investments; and the simply atrocious things people like Tom Gores have done to prisons (eg charging prisoners $15/minute to place phone calls to their families - “death by a thousand pennies.”)

Ballou, a federal prosecutor, acknowledges how it may feel hopeless to take on organizations like KKR / Carlyle Group / Blackstone, yet he clearly and simply lays out the specific reform needed to break apart the trusts of the 2nd Gilded Age and reinvigorate the American spirit.

[Joe E · Rating 4 out of 5]

“Private equity’s foray into housing illustrates one more aspect of the industry namely its frequent focus on businesses that target poor people. For an industry built to make money, why target people with the least? Because poor and working class people often lack alternatives to what they buy and this gives private equity the chance to raise prices and cut quality with impunity knowing that their customers have few alternatives.”

Not. Everything. Can. Be. For Profit.

More and more often in nursing homes, emergency rooms, for profit colleges, private loans, and prisons we are prioritizing profits over people. I rue the day when private equity takes down our public schools.

[Lev · Rating 3 out of 5]

The author does a good job at depicting questionable strategies and tactics deployed by private equity. As he structures the chapters by different industries, the reader gets an idea of their systematic dimension. Two points stand out: (i) PE appears to focus on markets that do not follow competitive, free-market patterns, but rather function to a certain extent through the help of government intervention. (ii) Sectors that largely work with lower-income workers and consumers also appear more attractive to PE. My main critique is that I miss a sense whether this is PEs whole business model, or whether the author addresses just some of the excesses that require rectification. I would have also wished for less emotive writing. The book, which is without doubt well-researched, wouldn't have lost any of its power through a more sober recount of facts.