How Private Equity Secretly Broke The Economy

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00:00 - What's happening?
00:31 - What is Private Equity?
03:13 - The beginnings of Private Equity
08:18 - How Private Equity took over the economy
10:03 - But there was a problem...
11:41 - The next target for Private Equity
13:22 - But this next target might be worse news
15:52 - How Private Equity could ruin the economy

642 US companies went bankrupt in 2023, the highest number since the great financial crisis. But what’s more surprising is that companies owned by private equity are 10 times more likely to go bankrupt. The problem is, 1 in every 14 workers in the US collect paychecks from companies owned by private equity.

But what is private equity? How do they have more money than Apple, Microsoft, Amazon and Tesla combined? And what are they doing to the US economy?

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All opinions expressed by Vincent Chan are solely Vincent Chan’s opinions. You should not treat any opinion expressed by Vincent Chan as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Vincent Chan’s opinions are based upon information he considers reliable, but does not warrant its completeness or accuracy, and it should not be relied upon as such. Vincent Chan is not under any obligation to update or correct any information provided. Vincent Chan’s statements and opinions are subject to change without notice.

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[JamesDecker]

As a physician I have been SCREAMING about PE in healthcare since I was in training. It’s a BIG part of our problems in the US.

[vinnieg]

I’m actually writing a case study on ethics of P/E in my ethics class, honestly will probably use your video as one of my citations, it was very well made

[emmanuelweinman]

So basically, super-consolidations of money for 100 people ruin it for the other 350, 000, 000 people. Makes sense this is still legal.

[CamachoPrez]

The separation of ownership and authority from responsibility and risk is the first sign of corruption in any 3rd world or authoritarian nation. It's not enough that such things be resisted in the way we behave socially and politically, it must also be guarded against economically.

[nickjames]

There aren't companies, there aren't banks, there aren't institutions...there are people. Understand that. These people have names, they're part of powerful and untouchable groups, and they're impoverishing you.

[mildew]

I work for an RE PE firm in Canada, and this is exactly what we do. Our PE firm continues to charge the AUM fees despite severely devalued commercial real estate valuations and year to year net losses as vacancies are high. We are still getting bonuses though. What a life for a PE firm.

[persimmontea]

The dentist office I went to for years went to PE when one of the partners retired. It had been a great place. Now, many of the good staff are gone and much cheaper ones brought in. All the employee perks are gone and so the staff esprit has vanished. Prices have gone up and now they try to sell you dental work you don't need so the trust is damaged. Before, if a cap broke, they replaced it free ... now, too bad. .... Yep, time to find an office run by the dentist themselves ... run by people who care.

[sarscov]

I borrow money, and you pay it back. How is this even legal?

[darin]

Privatizing profit while socializing risk is how billionaires are made. There should be laws against these kind of scams but all the offenders have to do is make a few political donations (more legalized corruption) and the law makers who are supposed to be working for us go to work for the billionaires instead. It's time for a populist revolution. And no, populism isn't fascism like the influence peddling corporate media keeps telling us. It simply means government of the people, by the people and for the people.

[scottmccaffrey]

I knew the PE firms loaded the companies they buy with debt but didn’t think about how easy it would be for them to for example put 1% down, say 1 million on a $100 million company, suck out 10 million in fees, , selling off assets etc. and then just let the company go bankrupt that is not officially part of the PE firm

[thedualtransition]

Its easy to stop this, make the buyout firm responsible for the debt without limited liability for the investors. This is legalized theft, not building real wealth.

[jonezy]

Holy fuck. This is all completely new to me. This should be a required watch. I've noticed for awhile how corporate healthcare seems to be these days, and providers have jam packed schedules and an overall decline in quality. I wonder if it also explains all the retail stores/restaurants cropping that seem to be flush with cash and can afford to put together a nice establishment, but are missing the soul of true individually owned small business

[cmdr]

My dad long ago instilled a hatred of PE firms. He ran multiple oil companies while regional, went toe to toe with the lines of Exxon and Chevron. The first company he ran was purchased by a PE. He took his pay out and left. 30 years later he still says PE ruins firms, short term gains is what they want. Not building a long term business. He also says it takes the fun out of running a company.

[heretic]

It's not Vincent Chan.

It's Vincent CHAD.

[drwayne_carter]

Wow, now I know what happened to my favorite local sandwich chain here in Arizona, Eegees. When the company was bought out the prices were raised, the quality dropped, and they charged extra for dips. They were acquired by 39 North Capital, an investment firm.

[robertotorres]

The larger context is that this issue and many other economic issues facing the country today has it’s origins in the deregulation of the financial services industry, primarily beginning in the 1980s with Ronald Reagan. In the olden days banks mostly just pooled depositor’s money and lent it out to others. Now financial institutions are creating riskier and riskier financial “products”. It is not by accident that we had the savings & loan crisis in the late 80s under Reagan. then the 2008-09 financial meltdown after 8 years of Bush. then the silicon valley bank crisis just recently. The deregulation has also been accompanied by the defunding of the federal oversight agencies which generally occurs under republican administrations. The SVB problem might have been averted without these cuts by Trump a few years before. Younger folks maybe see these events as “natural” economic problems that come up from time to time unavoidably. There’s nothing natural about it. These are policy decisions made by government and pushed for by financial interest groups.

[Dank_Matmo]

Incredible video. I really recommend viewers to read the book “barbarians at the gates”, speaks on how P/E destroyed great businesses during the late 70’s and early 80’s

[Viperever]

I used to work for a company owned by a PE firm. It was wild how they took this profitable debt-free but slow-growing company, piled on a bunch of debt, got a new CEO who went all-in on growth just as the economy took a nosedive lol. Our spending skyrocketed along with interest expenses but revenue growth was pathetic. Our cash flow was awful and could barely keep up with the payables.

[catserver]

Oh, thank you for making this one. Been feeling this for at least a decade.

[sc]

We could always push for repeal of carried interest… it won’t fix everything, but it will make a dent in the incentives