The American Dream Taken Over By Private Equity / Megan Greenwell
"Not all companies owned by private equity will go under but whether they go under or not is not of great concern to the private equity firms in charge. The basic way that private equity deals work is they bundle money with outside investors but they combine that money with bank loans. Between 70-80% of any given private equity acquisition is actually made of loans not of the investor money and those loans, the debt is the legal responsibility not of the private equity firm that made the decision to take out that debt but only of the portfolio company. So if I’m a private equity firm and I want to buy This Is Hell! radio. Maybe I borrow a billion dollars to do it because this a billion dollar radio show. And if I do drive This Is Hell! radio into bankruptcy and those loans do need to be paid back, only This Is Hell! radio has to pay that money back not me as the private equity firm even though my firm is worth more than that."
Megan Greenwell
Megan Greenwell is a writer, editor, and newsroom leader. Her book Bad Company: Private Equity and the Death of the American Dream is published by HarperCollins. Megan worked as the editor of Wired.com and, for four months, the interim editor-in-chief of WIRED, overseeing the publication’s transition to a global newsroom. Megan has written or edited for publications including The New York Times, The Washington Post, New York Magazine, WIRED, and ESPN. She is also the deputy director of the Princeton Summer Journalism Program, a workshop and college access initiative for students from low-income backgrounds.