Who's Buying America and What It's Costing You

By Courtney Turrin · May 25, 2026 · 30 min read read

A data-driven look at how private equity reshapes the businesses Americans depend on — and who pays when the model fails. Bankruptcy rates, price increases, fund-life pressure, and the concentration of capital in five firms.

There is a reasonable chance that a business you rely on is no longer owned by the person who built it.

Your dentist's office. Your veterinarian. The accounting firm your company has worked with for years. The hospital where your mother recovered from surgery. The retailer where you bought your kids' toys for decades. Sometime in the past 10 years, without a press release or a sign change, ownership of that business may have transferred to a private equity firm, a type of investment company whose model depends on extracting as much value as possible from the companies it buys before selling them to the next owner.

This is not a fringe phenomenon. Private equity firms completed 1,136 unique healthcare deals in the United States in 2024 alone. Private equity now controls somewhere between 30 and 50% of all veterinary clinics in the country, up from less than 10% a decade ago. According to KPMG Corporate Finance, by the end of 2025, more than half of the 30 largest U.S. accounting firms will have sold a stake to private equity investors, up from zero in 2020. In 2025, private equity-backed companies accounted for 54% of the largest corporate bankruptcies in the United States. This is a striking figure given that, according to a report commissioned by the industry's own lobbying group, the American Investment Council, private equity (PE)-backed companies represent approximately 7% of total U.S. GDP. (Figure 1)

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The research on what happens to these businesses after acquisition, as well as to their employees, customers, service partners, and the communities around them, has been accumulating for years in peer-reviewed journals, government reports, and bankruptcy court filings. It tells a consistent story.

How private equity works

When a private equity firm acquires a company, it typically does not pay for that acquisition with its own money. Instead, it borrows most of the purchase price, often 60 to 70% of the total cost, from banks and other lenders. The deal is called a leveraged buyout. The borrowed money does not stay on the private equity firm's balance sheet. It transfers to the company being acquired. The business that was just purchased now owes the money that was used to buy it.

A firm that buys a company for $100 million might put up $30 million of its own capital and borrow the other $70 million. From that moment forward, the acquired business has to generate enough cash to service that debt, paying interest, meeting loan covenants, satisfying lenders, all while also trying to operate and grow. The private equity firm controls the company while carrying a fraction of the financial risk.

This structure creates an immediate and non-negotiable constraint. Every decision made after acquisition, including staffing levels, vendor contracts, capital investment, service quality, and how quickly invoices get paid, gets filtered through debt pressure that the business did not choose and cannot negotiate away.

How private equity makes money

The leveraged buyout is the entry mechanism. Once a firm controls a company, several additional methods for extracting value come into play before the exit.

The roll-up. Many private equity firms execute what the industry calls a roll-up: acquiring multiple companies in the same sector and consolidating them into one larger entity. The logic is arithmetic. A small business might sell at five times its annual profit. Combine ten of them, and the resulting entity, now large enough to attract institutional buyers, might command seven or eight times earnings at sale. The gap between what the firm paid per company and what it collects for the whole is where the return is made. Whether the businesses themselves are in better shape at the end of that process is a different question, and largely beside the point of the investment thesis.

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Management fees. Private equity firms routinely charge the companies they own annual fees for advisory and oversight services. These fees are paid by the operating company to its owners, regardless of how the business is performing. When KKR, Bain Capital, and Vornado owned Toys "R" Us, they collected more than $470 million in fees and interest payments over the course of the investment. The company filed for Chapter 11 bankruptcy in 2017. The fees had already been collected.

Dividend recapitalization. A private equity firm directs a company it owns to take on additional debt (new loans, on top of the original acquisition debt) and then uses those borrowed funds to pay a dividend to itself. The firm receives a cash payout. The company absorbs more debt.

Millennium Health, a clinical laboratory company, paid its private equity owner TA Associates a total of $1.6 billion in debt-funded dividends, including $300 million in 2012 and $1.3 billion in the year leading up to the company's 2015 bankruptcy. TA Associates took these dividends while Millennium was under active investigation by the U.S. Department of Justice (DOJ), loading the company with $1.8 billion in debt to finance the payouts despite the pending litigation, as reported by the Wall Street Journal.

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Sterigenics, a medical sterilization services company owned by Warburg Pincus and GTCR through parent company Sotera Health, paid its owners at least $1.17 billion in debt-financed dividends between 2016 and 2019, including a $340 million dividend in 2016 representing 57% of the company's revenue that year. During this same period, Sterigenics faced a 2019 Environmental Protection Agency (EPA) report finding that toxic ethylene oxide emissions from its Willowbrook, Illinois, facility created cancer risks up to ten times what the EPA considers acceptable. More than 700 lawsuits followed. Illinois plaintiffs' attorneys alleged in court filings that the ownership group had deliberately moved money out of the company through dividend recapitalizations to place assets beyond the reach of personal injury claims.

Asset stripping. Private equity firms sometimes sell off a company's physical assets, most commonly real estate, and then require the company to lease back what it formerly owned, creating an ongoing rent obligation where none previously existed. After Sun Capital acquired Shopko, a Midwestern discount retailer, it sold the company's real estate for $800 million and forced Shopko to lease back its stores. The added rent costs contributed to Shopko's liquidation in 2019, costing approximately 14,000 workers their jobs.

In each of these mechanisms, the operating company absorbs the risk. The private equity firm extracts the reward.

What happens to employees

The research on what private equity acquisition does to workers is extensive and consistent across countries and time periods.

A landmark study by researchers at Harvard Business School and the University of Chicago documented that private equity takeovers typically result in job losses at the companies they acquire. Research using German data found employment losses of approximately 12% and earnings losses of about 20% three years after a buyout, concentrated most heavily among lower-wage workers and those with shorter tenure. A study published in the Journal of Labor Economics found that unemployment incidence doubles for workers in less productive firms following a private equity acquisition.

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In retail alone, private equity-driven bankruptcies, store closings, and downsizings shuttered roughly 18,000 stores and eliminated approximately 542,000 jobs between 2000 and February 2020, according to Americans for Financial Reform. More than half of all retail bankruptcies since 2015 involved private equity-backed chains. In a single decade, private equity-owned retailers including Toys "R" Us, Sports Authority, Sears, Shopko, Payless Shoes, and others shed approximately 600,000 jobs, even as the retail industry as a whole added one million jobs over the same period.

The disruption extends past raw job counts. According to the AlixPartners 9th Annual PE Leadership Survey, CEO turnover is unplanned roughly 20% more often than it is planned at PE portfolio companies, and six out of ten CEO replacements happen during the first year of the hold period, suggesting systematic weaknesses in executive assessment or due diligence failures around talent. Nearly two in five operating partners surveyed said they intended to remove at least one CEO in the next 12 months. More than half of portfolio companies and PE firms alike reported having no succession planning process in place. The people below those executives, including the managers, team leads, and individual contributors who actually run day-to-day operations, inherit the instability.

What this produces is organizational dysfunction. Companies acquired through roll-up strategies are integrating workforces from multiple businesses simultaneously, without adequate time, resources, or infrastructure. Research on post-merger integration consistently documents failure rates ranging from 50 to 70%, with organizational integration cited as the primary driver of those failures. People who have never worked together find themselves on the same team with overlapping or undefined responsibilities, unclear reporting structures, and no institutional memory of how either company operated before the deal.

What happens to customers

The effects on people who use these businesses have been studied most extensively in healthcare.

A 2023 study published in the Journal of the American Medical Association (JAMA) found that among hospitals acquired by private equity firms, admitted Medicare patients experienced a 25% increase in hospital-acquired adverse events after acquisition compared to matched non-private equity hospitals, including a 27% increase in falls and a 38% increase in central line-associated bloodstream infections. The latter finding is particularly notable: infection rates rose even as the number of procedures that cause them declined.

A 2025 cohort study analyzing Hospital Consumer Assessment of Healthcare Providers and Systems data found that patient-reported care experience worsened after private equity acquisition, with declines in overall hospital ratings and willingness to recommend that grew larger each year, reaching 5.2 and 4.4 percentage points below matched control hospitals by year three post-acquisition.

A systematic review of 55 studies published in The BMJ found that in every studied healthcare setting, private equity acquisition increased costs to patients and payers, in some cases by as much as 32%, with mixed to harmful effects on care quality. (Figure 2)

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Dentistry shows the same pattern at the practice level. Research published in Health Services Research found that private equity-owned dental offices shifted from preventive procedures toward higher-cost restorative and surgical procedures following acquisition, raised list prices for services by an average of 3.3%, and did not pass either change on as improvements in care quality or provider compensation. PE-acquired oncology practices charged 5.3% higher office visit prices and increased radiation therapy spending by more than 50% compared to non-acquired practices, without evidence of improved patient outcomes. Similar findings have been documented across cardiology, ophthalmology, plastic surgery, and reproductive and fertility care. A 2025 JAMA study found that 32% of U.S. fertility clinics were affiliated with private equity firms as of 2023, and that those clinics were performing more than half of all in vitro fertilization (IVF) cycles in the country.

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A 2021 study by researchers at the University of Pennsylvania, NYU, and the University of Chicago Booth School of Business, published by the National Bureau of Economic Research, found that short-term mortality rates at nursing homes acquired by private equity firms were 10% higher than at comparable non-PE facilities, representing an estimated 20,000 additional deaths over the 12-year study period. Medicare costs per patient stay were more than 10% higher at PE-owned facilities. Staffing hours for frontline nursing assistants declined.

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Veterinary medicine has followed the same arc. PE and corporate firms now control between 30 and 50% of all U.S. veterinary clinics, up from less than 10% a decade ago. Veterinary care prices rose 32% between 2020 and 2024, according to Bureau of Labor Statistics data. The American Economic Liberties Project documented price hikes of up to 100% for routine veterinary services in some markets. The Federal Trade Commission (FTC) has twice ordered JAB Holding Company, one of the largest private equity investors in veterinary practices, to divest clinics in concentrated regional markets. Senators Elizabeth Warren and Richard Blumenthal wrote to JAB in 2024 describing how corporate managers at private equity-owned practices require veterinarians to meet demanding revenue quotas for specific procedures, with their compensation tied directly to the amount of revenue they generate.

Professional services firms are among the latest targets. According to KPMG Corporate Finance, over the past three years, a third of the largest U.S. accounting firms have either been acquired or received investment from private equity firms, with the pace accelerating. Bloomberg Tax reports that approximately a quarter of the 30 largest U.S. accounting firms completed PE deals in 2024 alone, with Blackstone, KKR, and Carlyle among the firms entering the sector. A survey of accounting professionals found that 64% believe private equity will have a negative impact on the integrity and independence of public accounting firms, and 56% expect clients to suffer negative consequences. The American Institute of CPAs issued a staff alert flagging the risk of "undue pressure to act unethically in pursuit of new revenue goals".

The pattern across dentistry, veterinary care, hospitals, and now accounting: the people delivering the services are also casualties. They entered their professions to serve clients and patients, and they find themselves navigating between those clients and owners they never chose, meeting quotas tied to financial targets set by people who have never done the work.

Most customers never know any of this happened. Fewer than 15% of corporate consolidators put their brand on the practices they acquire. The clinic still has the same name on the door. Customers are not notified that ownership changed, that the business is now carrying significant acquisition debt, or that the professional they trusted has been told to hit a revenue number.

When the model fails: who pays

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Research from California Polytechnic State University, tracking 484 leveraged buyout transactions for 10 years post-acquisition, found that approximately 20% of companies acquired through leveraged buyouts went bankrupt within a decade, compared to a 2% bankruptcy rate for a matched control group of companies that were not acquired. That is a 10-fold increase in bankruptcy risk, attributable to the debt these companies were required to carry from the moment of acquisition. (Figure 3)

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Private equity-backed companies were involved in 54% of the largest U.S. corporate bankruptcies in 2025, and 65% of the largest in 2024, far out of proportion to their share of the broader economy.

When these companies fail, the losses flow almost entirely toward workers, vendors, and communities rather than toward the firms that designed the strategy. Under federal bankruptcy law, vendors and service providers are classified as unsecured creditors, with no collateral securing what they are owed. They are paid only after secured creditors and priority claims are satisfied. In many bankruptcies, that means cents on the dollar, or nothing.

Workers face a similar hierarchy. Companies routinely use the bankruptcy process to break union contracts, eliminate pension obligations, and avoid severance commitments, even while executive bonuses are paid to retain management through the proceedings. According to Harvard's Edmond and Lily Safra Center for Ethics, at least 51 companies have abandoned pension plans in bankruptcy at the behest of private equity firms since 2001, dumping $1.592 billion in pension obligations onto the Pension Benefit Guaranty Corporation and leaving nearly 102,000 workers and retirees with reduced or eliminated benefits totaling at least $128 million in losses.

The cases that made this visible are not isolated incidents.

When Toys "R" Us filed for bankruptcy in 2017 after KKR and Bain Capital loaded it with more than $5 billion in acquisition debt, approximately 31,000 employees were notified their employment was terminated and that the company would not pay severance, despite a longstanding policy of one week's pay per year of service. Court documents showed that bankruptcy law placed private equity investors near the front of the recovery line, while employees ranked near the bottom. The firms had already extracted more than $470 million in fees and interest over the life of the investment.

Shopko followed the same pattern. After Sun Capital sold the company's real estate for $800 million and forced Shopko to lease it back, the added debt and rent obligations drove the chain into liquidation in 2019. Approximately 14,000 workers lost their jobs. Senator Elizabeth Warren and Representative Alexandria Ocasio-Cortez wrote to Sun Capital expressing alarm that the firm, after "years of looting the discount retailer Shopko and then driving it into bankruptcy," was reportedly preparing to break its promise to make severance payments to thousands of workers. The $800 million from the real estate sale had already been distributed.

Payless Shoes, also taken private through a leveraged buyout, filed for bankruptcy in 2017, emerged, and filed again in 2019, closing all remaining U.S. stores and eliminating more than 16,000 jobs. The Steward Health Care hospital system's 2024 bankruptcy reported nearly $1 billion owed to vendors and medical suppliers at the time of filing. These were service providers who had delivered goods and services under contract to a health system whose private equity owners had completed a sale-leaseback of the company's hospitals years earlier, extracting capital while leaving Steward responsible for rent on facilities it had formerly owned.

How concentrated is private equity?

The number of private equity-backed companies in the United States has grown from roughly 2,000 in 2000 to more than 12,500 as of 2025, according to PwC and Cherry Bekaert data cited by Dealroom, a 500% increase over 25 years. Over the same period, the number of publicly listed companies on U.S. stock exchanges declined from roughly 7,500 at their 1997 peak to approximately 4,010 in 2024, according to the Federal Reserve and World Bank data. Public companies are disappearing. Private equity-backed companies are proliferating.

That growth is increasingly concentrated. S&P Global Market Intelligence reports total U.S. private equity assets under management reached $3.128 trillion as of September 2024. But the capital is not spread evenly across thousands of small firms. According to more recent investor disclosures and SEC filings, the five largest alternative asset managers with significant private equity platforms — Blackstone ($1.3 trillion in total assets under management (AUM)), Apollo ($938 billion), KKR ($744 billion), Carlyle ($441 billion), and Ares ($623 billion) — now collectively manage more than $3.7 trillion in combined assets. Carlyle may be particularly familiar to Virginia readers: Glenn Youngkin spent 25 years at the firm, served as its co-CEO, and built a personal fortune estimated at roughly $400 million before leaving in 2020 to run for Virginia governor, winning the 2021 race. (Figures 4 and 5)

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The 10 largest fund closes in 2025 captured 46% of all capital raised, up from 35% in 2024. The number of buyout funds declined 23%. Capital is consolidating upward into fewer hands at an accelerating rate.

What this means in practice: a small number of firms are acquiring an expanding share of the businesses that Americans depend on, across an expanding range of industries, with an increasing proportion of the capital involved.

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When PE-backed companies account for 54% of the largest bankruptcies while the five largest PE firms collectively manage assets approaching the GDP of Germany, the phrase "systemic risk" is not an overstatement. The firms are insulated from the failures by design. The workers, vendors, pension holders, and communities are not.

Why regulators have largely missed it

One of the most significant structural features of PE roll-up strategies is that they are specifically designed to avoid regulatory review. Under the Hart-Scott-Rodino Act, companies are only required to notify the FTC and DOJ before completing mergers valued above $119.5 million. A private equity firm can acquire 15 competitors in a regional market, paying $80 million per transaction, consolidating an entire industry, eliminating competition, and gaining pricing power, and never once trigger mandatory antitrust scrutiny. Each deal is invisible to regulators individually. The cumulative damage becomes visible only after it is done.

The FTC documented this explicitly in a May 2024 blog post: "Roll-up schemes, popular with private equity companies and other corporate actors, can be executed through a series of smaller acquisitions that individually fall below the threshold for reporting to the antitrust agencies. A series of relatively small acquisitions can have the same impact on competition as one large one, allowing one firm to eliminate competition and amass significant control over products and services without review by the antitrust agencies."

The 2023 Merger Guidelines issued by the FTC and DOJ now explicitly recognize that serial acquisitions can violate antitrust law even when no individual transaction crossed the reporting threshold. The first major test case came in September 2023, when the FTC sued Welsh Carson and U.S. Anesthesia Partners (USAP), alleging they had systematically acquired nearly every large anesthesia practice in Texas to create a single dominant provider with the power to demand higher prices. A federal court dismissed Welsh Carson from the case in May 2024 on procedural grounds; the firm had reduced its ownership stake in USAP to a minority position, and the court found it was not currently violating the law as required for an injunction under that statute. The FTC's case against USAP continued in federal court. Separately, Welsh Carson reached a consent order with the FTC in January 2025, finalized in May 2025, requiring it to freeze its ownership stake in USAP, limit its board representation, and obtain FTC approval before acquiring any future anesthesia business nationwide. The enforcement tools now exist. Whether future administrations use them with sufficient consistency to change industry behavior is a different question.

Housing: the market closest to home

The same consolidation dynamic that reshaped healthcare and professional services has reached residential real estate, and its effects are felt differently depending on where you live.

Institutional investors, including private equity-backed single-family rental companies, have acquired hundreds of thousands of homes across the United States since the 2009 financial crisis, when distressed housing prices made residential real estate an attractive target. A 2024 working paper from the Federal Reserve Bank of Philadelphia found that when institutional investors acquire properties, they increase rents at substantially faster rates than other landlords and that their presence in a neighborhood accelerates rent increases by smaller landlords nearby, producing pricing pressure beyond the properties they directly own. A U.S. Government Accountability Office analysis found institutional investors owned between 4 and 22% of single-family rental homes in the six metro areas studied.

The academic literature on housing is more contested than the healthcare data. Some economists argue institutional investors represent too small a share of total housing stock to drive national price trends, and that supply constraints are the primary driver of affordability problems. The Federal Reserve Bank of Richmond found that in Virginia, investor-owned single-family homes correlate with faster price growth in urban counties, while noting that most investor activity in the state involves smaller-scale landlords rather than institutional players. The debate about cause and effect is ongoing.

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What is not contested: in Richmond specifically, institutional investors purchased 6.3% of all home sales in 2024, according to ATTOM data reported by Axios Richmond, up from 6.2% in 2023, even as national investor activity declined. A 2022 report from Drexel University's Nowak Metro Finance Lab found that between 2020 and 2021, nearly 20% of all single-family home sales in Richmond went to investors. Virginia state legislators have introduced bills to restrict large institutional investors from purchasing single-family homes; as of early 2025, those efforts had not succeeded.

Whether institutional real estate investment is the primary cause of housing unaffordability or a contributing factor within a larger supply-and-demand problem, it represents the same underlying dynamic present in every other industry covered in this piece: capital accumulation by a small number of large investors, at the expense of individuals trying to access something they need.

A pressure cooker: uninvested capital and the exit backlog

The PE industry is currently facing a structural tension that has direct implications for the businesses it owns and the people who depend on them.

PE funds raise capital from their limited partners with a contractual obligation to deploy it and return profits within a fixed window. When exit markets slow (when it becomes harder to sell portfolio companies at the expected price) that capital sits idle, fund timelines compress, and the pressure on existing portfolio companies to produce returns intensifies.

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By mid-2025, global PE firms were sitting on approximately $1.2 trillion in uninvested committed capital, capital that has been promised to the fund but not yet deployed into acquisitions. In the industry, this stockpile of committed but uninvested capital is called "dry powder," a term borrowed from military history meaning reserves held in readiness. Twenty-four percent of this capital had been sitting uninvested for four years or longer, beyond the typical five-year window in which PE funds are expected to deploy committed capital. At the same time, approximately 29,000 portfolio companies globally remain unsold and waiting for exit, with $3.6 trillion in unrealized value on PE balance sheets. Average hold periods have stretched to 6.7 years, nearly double the 3–4 year average from the mid-2000s. (Figure 6)

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The practical consequence for portfolio companies: firms under pressure to exit positions and return capital to investors have intensified incentives to extract cash through the mechanisms described earlier in this piece (management fees, dividend recapitalizations, and cost-cutting) before a sale can be completed. The companies most likely to experience this pressure are those acquired during the 2019–2021 period, when valuations were high and exit windows are now strained. Nearly half of all PE-backed companies currently held were acquired since 2020.

This is not a future risk. It is the current operating condition of thousands of businesses across the U.S. economy.

The vendor experience

There is one dimension of private equity's operational impact that receives almost no formal research attention, for reasons that are not difficult to understand.

Businesses and service providers that work with private equity-backed clients are almost universally reluctant to speak publicly about those relationships. The power in the relationship is not symmetrical: the vendor depends on the client's continued business; the client is indifferent to any particular vendor. Speaking critically about a former client, even after the relationship ends, risks being seen as unprofessional and closes doors to future work. So vendors stay quiet.

The structural conditions that produce a particular vendor experience are, however, independently documented across everything described above. When a company's debt burden requires continuous cost reduction, vendor contracts are among the first places that pressure appears. When organizational integration has failed and staff turnover is high, the people on the other side of a vendor relationship cycle frequently, approval chains become unclear, and accountability for scope and deliverables erodes. When the team managing vendor relationships has unclear roles and no institutional authority to make decisions, they cannot approve additional work, navigate payment processes, or produce the inputs that vendors need to complete the work.

The result is predictable. Scope expands informally because the client's own team cannot perform work that was contractually theirs. The same budget pressure that produced a narrow vendor contract also produced a client-side team too thin to do its part. Timeline pressure substitutes for proper process, because the alternative requires organizational decision-making capacity that doesn't exist. Payment delays compound into disputes, and then into silence from a contact who has left, been reassigned, or is simply overwhelmed by responsibilities that accumulated faster than any infrastructure was built to support them.

This has been my direct experience as a marketing agency owner working with private equity-backed companies. The pattern described above is not theoretical. It is the operational texture of those client relationships.

I am not alone in this experience. The research is thin not because the problem is rare, but because service vendors face a structural disincentive to document it publicly. They absorb the loss and move forward.

What the industry says, and what the data shows

There is a version of the private equity story that the industry tells about itself. It goes like this: PE provides capital to businesses that cannot access public markets; it brings operational discipline to companies that lack it; it creates jobs and generates competitive wages; and bad actors should not define an entire industry. Some of this is true in limited contexts. A 2014 peer-reviewed study published in the American Economic Review found that leveraged buyouts produce productivity gains at some target firms, particularly through closing underperforming operations and opening more productive ones. There is genuine evidence that some PE investments improve the businesses they touch.

The more complete version of the evidence shows what those operational gains actually produce. Hospitals that score better on internal efficiency metrics under PE ownership simultaneously produce higher rates of patient falls and bloodstream infections, per the JAMA data. Companies that improve productivity under PE ownership simultaneously show wage compression, job losses, and when the model ultimately fails, the elimination of pension benefits that workers spent careers earning, per the peer-reviewed literature. The efficiency argument and the outcomes argument are not in conflict; they describe the same model from two different vantage points. The model optimizes for what is measurable and monetizable. What gets left out of that optimization is what the research documents.

The tax structure behind the profit

The financial advantages built into the private equity model extend beyond the companies PE firms acquire. They also extend to how the people running those firms are taxed.

PE fund managers typically receive two forms of compensation: a management fee of around 2% of committed capital annually, and a performance fee called carried interest, typically 20% of the fund's profits above a threshold return. Management fees are taxed as ordinary income, at a top federal rate of 37%. Carried interest, however, is taxed as long-term capital gains, at a top federal rate of 20%, a 17-point difference on the same dollar of compensation.

The rationale offered by the industry is that carried interest represents a return on investment risk. Critics like the Congressional Research Service, multiple former Treasury secretaries, and economists across the political spectrum counter that carried interest is functionally a performance bonus for managing other people's money, and that taxing it at capital gains rates rather than ordinary income rates is a subsidy with no policy justification. The Tax Policy Center estimates carried interest generates approximately $98 billion annually across the U.S. investment management sector. At the 17-point rate differential, the tax advantage to fund managers amounts to an estimated $16.7 billion per year in foregone federal revenue.

Attempts to close the loophole have repeatedly stalled. The Tax Cuts and Jobs Act of 2017 extended the required holding period from one year to three years to qualify for capital gains treatment, a modest tightening that left the core structure intact. The Build Back Better Act included provisions to end it; those provisions were dropped during Senate negotiations. The Inflation Reduction Act originally included carried interest reform, but it was removed before passage. As of 2025, the carried interest tax treatment remains in place, protected by an industry that spends approximately $300 million annually on lobbying.

The people whose pension benefits were wiped out when PE-backed companies filed for bankruptcy paid ordinary income tax rates on the wages that funded those benefits. The fund managers who structured those deals paid capital gains rates on the profits.

The investors behind private equity, and why the clock always runs

Understanding why PE firms behave the way they do requires understanding who their investors are and how the fund structure itself creates pressure.

PE funds are organized as limited partnerships with a fixed lifespan, typically 10 years, sometimes with one- or two-year extensions. The investors in those funds, called limited partners, are primarily institutions: public pension funds, university endowments, insurance companies, and sovereign wealth funds. According to S&P Global Market Intelligence, the top 20 global pension funds with the largest PE allocations had committed $707.6 billion to private equity funds as of 2024. Harvard's endowment had allocated 39% of its assets to private equity. The University of Texas and Texas A&M's investment arm had allocated 30%.

This creates a structural irony. The same pension funds whose members lost retirement benefits when PE-backed companies abandoned their pension obligations are, in many cases, limited partners in other PE funds making similar acquisitions. Public school teachers, state employees, and municipal workers are indirect investors in the same industry that has systematically eliminated pension benefits at the companies it acquires.

The 10-year fund lifespan creates a mechanical deadline that explains behavior that might otherwise appear simply shortsighted. The general partners running the fund, the PE firm, must acquire companies, generate returns, and exit all their positions within the fund's life. Capital committed by the limited partners must be returned within that window. This is not greed as a character trait; it is a contractual requirement baked into every fund agreement. A PE firm that genuinely wanted to hold a company for 20 years and invest in its long-term health would have to build an entirely different kind of fund structure to do it. Within the standard structure, the incentive to extract value quickly is not a flaw in the system. It is the system.

A leadership problem

Private equity is not an abstraction. It is a set of decisions made by specific people with names, firms, and significant influence over how the economy functions and what it values.

The research is extensive, consistent, and peer-reviewed. Private equity acquisition is associated with meaningful increases in bankruptcy risk, wage reductions and job losses, higher prices and worse outcomes for patients and customers, and organizational disruption that makes affected companies difficult or impossible to work with. When the model fails, the losses go to workers, vendors, customers, and communities, and not to the firms that structured the deal.

None of this is a surprise to the people running these firms. The bankruptcy risk is in the academic literature. The patient harm data is in JAMA. The pension dumping is documented by the federal agency created to insure those pensions. The pressure on veterinarians to hit revenue quotas is the subject of congressional letters. The professional accounting standards body has issued a formal alert about ethical pressure on certified public accountants (CPAs) inside PE-owned firms. The information is not hidden.

This is not a case of unintended consequences. It is the documented, foreseeable outcome of a model that offloads cost onto everyone except the people who designed it.

The economy that this model is building, one in which the businesses people depend on are repeatedly acquired, loaded with debt, stripped of resources, and sold again before the damage becomes visible, is one that works for a very small number of people.

What you can do with this information

The structural forces described above are large, and no individual action reverses them. But several respond to exactly the kind of pressure individuals can apply.

Find out who owns the businesses you use. Ownership is not always disclosed, but it is often discoverable. In many cases, a search of a business name plus "private equity" or "acquired by" surfaces ownership changes. Knowing is the first step to making a different choice when one exists.
Support locally owned businesses when you have the option. When you spend money at a locally owned business, more of it stays in the local economy, and the person making decisions about that business is accountable to the community in a way that a fund manager is not.
Contact your federal representatives. The carried interest tax treatment and the Hart-Scott-Rodino reporting thresholds are statutory, meaning that Congress can change them. Your representative's contact information is at house.gov; your senators are at senate.gov. Constituent contact on specific legislation gets logged. It is one of the few inputs that actually reaches congressional offices directly.

Disclosure: Channel RVA is owned by Xponent21.