Private Equity Pillage

April 2019, Eileen Appelbaum and Rosemary Batt

The private equity business model is to strip assets from companies that they acquire. The latest victims: retail grocery chains.

Since 2015 seven major grocery chains, employing more than 125,000 workers, have filed for bankruptcy. The media has blamed “disruptors” — low-cost competitors like Walmart and high-end markets like Whole Foods, now owned by Amazon. But the real disruptors in this industry are the private equity (PE) owners who were behind all seven bankruptcies. They have extracted millions from grocery stores in the last five years—funds that could have been used to upgrade stores, enhance products and services, and invest in employee training and higher wages. As with the bankruptcies of common household names like Toys “R” Us, PE owners throw companies they own into unsustainable debt in order to capture high returns for themselves and their investors. If the company they have starved of resources goes broke, they’ve already made their bundle.

This is all perfectly legal. It should not be.

Launch the feature below.

Private Equity Pillage: Grocery Stores and Workers At Risk

The private equity business model is to strip assets from companies that they acquire. The latest victims: retail grocery chains.

Enter

keywords