These Are the Plunderers

March 15, 2023
The troubled story of private equity, which is anything but equitable. Private equity, write financial journalists Morgenson and Rosner, typically builds nothing. Instead, it leverages troubled companies, loots what assets they have, trims expenses to the bone, and often leaves acquisitions in bankruptcy or ruin. One philosopher the authors quote calls it "asshole capitalism," and while the authors are a touch more genteel, they don't hesitate to call the practitioners of "this rapacious form of capitalism" pirates and worse. By way of example, they look into the private-equity acquisition of nursing homes, a favorite target. In those cases, equity ownership equates to a far higher death rate, more visits to emergency rooms, and increased Medicare costs. Private equity has also absorbed huge chunks of the medical sector, laying off doctors and cutting out essential services even at the height of the coronavirus pandemic. On that note, the authors observe, private owners took great pains to use the cheapest possible ventilators for Covid-19 patients in critical care, which finally resulted in a federal fine of $40.5 million, a fraction of what they made. As Morgenson and Rosner clearly show, the pirates are flourishing; while there were but three "debt-fueled billionaires" in 2005, there were 22 in 2020. Much of this wealth comes from self-dealing, for apart from owning medical providers, private equity is also heavily invested in insurance, ripe with the possibilities of conflict of interest. No matter what the sector--and equity is now moving rapidly into education--the modus operandi is the same: "slash costs, eliminate higher-paid union workers, and reduce employee benefits; shut down less profitable divisions; or acquire competitors to bolster the pricing power of the company they own." In addition, these firms, which have doubled in number in the last decade--are well protected in Congress. A well-documented, maddening book that cries out for legislative reform and regulation.

COPYRIGHT(2023) Kirkus Reviews, ALL RIGHTS RESERVED.

Starred review from April 17, 2023
Morgenson, senior financial reporter for NBC News, and Rosner, a financial policy consultant, follow their 2011 collaboration, Reckless Endangerment, with a blistering critique of how private equity “extracts wealth from the many to enrich the few.” Damning case studies reveal how such firms as Apollo Global Management and the Blackstone Group have made billions by buying struggling enterprises and imposing drastic cost cutting to the detriment of customers and employees. The authors describe how in 2007, Apollo bought the Noranda smelting company in New Madrid, Mo., and forced it to take on hundreds of millions of dollars in debt to pay Apollo executives, cratering the region’s economy when the company shuttered under the weight of its debt. Detailing how firms stymie regulation, the authors trace how Blackstone funded a fake grassroots group that ran ads against legislation that would have reined in Blackstone’s practice of sending “surprise” medical bills to patients who used emergency rooms owned by the firm. Morgensen and Rosner excel at capturing the complex financial maneuverings in crisp, accessible prose, and horror stories about how buyouts shortchanged nursing home residents and life insurance policy holders drive home the callousness of the private equity business model. Fiery and incisive, this is an essential account of how Wall Street pilfers the pockets of ordinary Americans.

Starred review from April 1, 2023
Pulitzer Prize-winning journalist Morgenson, along with research-consultancy managing director Rosner, uncovers a 30-year span of private equity and its impact on American lives. Private-equity firms, the authors contend, buy companies and load them with debt while bleeding them of assets. The firms then sell the companies to new owners at a substantial profit for themselves while the companies go bankrupt. Sears and Toys "R" Us are prime examples. This causes job losses, a move away from pension compensation, and crumbling industries. When private capital comes into sectors like health care and public-service jobs like firefighting, individuals often shoulder a larger tax burden to fund those pensions. These and many more examples highlight the history of private-equity development and the destruction that this type of quasiregulated capitalist venture has caused, especially to the middle class and working poor. Readers will be drawn into the duo's storytelling, and even those who aren't financially savvy will be able to grasp the topic. It's a must-read for all for help in understanding a predacious side of capitalism.

COPYRIGHT(2023) Booklist, ALL RIGHTS RESERVED.