Protecting Family Businesses & Workers
Private equity serves a role in the economy—providing capital, restructuring struggling businesses, and driving efficiency. But too often, the model has devolved into a wealth extraction machine: buy a company with borrowed money, load it with debt, strip its assets, collect enormous fees and distributions, and then flip the company in a few years. That isn't what private equity should be. Workers lose their jobs and communities lose their businesses while a handful of people at the top walk away rich.
The single most important thing to understand is why this keeps happening: the firm gets paid whether the company lives or dies. It's heads-they-win, tails-you-lose—and until that changes, the incentive to bleed a business dry will always be there.
If you want to see where this model leads when it's aimed at something that actually matters, look at health care. In 2025, private-equity-owned companies accounted for 44% of the largest health care bankruptcies—even though private equity is only about 7% of the economy. Two big PE-backed hospital chains, Steward Health Care and Prospect Medical Holdings, collapsed into bankruptcy that year, stranding entire communities with fewer places to get care. Genesis Healthcare, a nursing-home operator, filed Chapter 11 with $2.3 billion in debt—affecting roughly 15,000 residents and 27,000 workers across 18 states.
This isn't just a financial story—it's a body count. Research has linked private-equity ownership of nursing homes to roughly 11% higher patient mortality, fewer nurses per resident, and ten times the bankruptcy risk of other homes. When you buy a hospital, mortgage the building out from under it in a sale-leaseback, pay yourself the proceeds, and then charge the hospital rent it can't afford, the people who pay the real price aren't investors. They're patients, and the nurses who care for them.
The extraction version of private equity runs the same handful of moves, and once you see them you can't unsee them:
The leveraged buyout. The firm buys a company using mostly borrowed money—then puts that debt on the company's books, not its own. The business now owes millions it didn't borrow and never saw.
The dividend recap. The firm has the company borrow even more money—and pays that cash straight out to itself as a "dividend." The investors get paid back fast, win or lose, while the company is left holding the note.
The sale-leaseback. The firm sells off the company's most valuable asset—usually its real estate—pockets the proceeds, and forces the company to rent back the building it used to own. The crown jewels are gone; the rent bill is forever.
The fees. On top of it all, the firm charges the company "management" and "monitoring" fees every year for the privilege of being owned. By the time the business buckles, the fund has often made its money several times over—which is exactly why the collapse of the company isn't a failure for them. It's the plan.
When private equity buys up housing stock and drives rents through the roof, that's a Main Street problem. When firms acquire multi-generation family businesses only to gut them for parts, that's not capitalism—it's predation. When executives pocket billions while the companies they acquire crumble under debt, ordinary Americans pay the price.
Multi-generation family businesses are the backbone of communities across this country, and we need policies that help them stay family-owned rather than becoming PE targets. Right now, when a founder retires and there's no succession plan, a private equity roll-up is too often the only buyer standing there with a checkbook—and another local institution gets absorbed, renamed, loaded with debt, and eventually hollowed out.
There's a proven alternative that keeps the wealth where it's created. Employee Stock Ownership Plans (ESOPs) give workers a real stake in the companies they build—and they give a retiring founder a way to sell the business to the very people who made it successful, rather than to a fund that will strip it. Employee-owned companies tend to be more stable, more productive, and far more likely to still be standing—and still hiring—in the same town a generation later.
We should be nurturing and incentivizing ESOPs as the default succession path, not the rare exception. Make the tax treatment genuinely favorable, cut the red tape that makes setting one up expensive, and give founders real information about employee ownership before private equity is the only option on the table.
Private equity isn't going away, nor should it—there's a real, useful version that rescues struggling companies and puts capital to work. The goal is to kill the extraction playbook without killing the legitimate business. That means putting the firm's own skin back in the game:
Make the firm share the downside. If you load a company with debt and it fails, you shouldn't get to keep the dividends you paid yourself on the way down. Claw back cash pulled out shortly before a bankruptcy, and put a real leash on dividend recaps in the first years after a buyout.
Put workers and pensions near the front of the line when an acquired company goes bankrupt—not dead last behind the financiers who engineered the collapse.
Special guardrails where lives and homes are at stake. In health care and housing especially, require transparency about who actually owns a hospital, a nursing home, or a block of rentals, and limit the asset-stripping tactics that turn essential services into extraction targets. States are already moving—dozens of bills in 2026 alone—and a sane federal standard would help.