Private Equity: Your Ears Will Bleed

In this episode of "Stuff You Should Know," Josh and Chuck delve into the world of private equity, defining it as an alternative investment vehicle used to buy and restructure companies for profit. They discuss the history of private equity, its rise in popularity since the 1970s, and the key figures who shaped its principles, such as Milton Friedman and Michael Jensen. The hosts critique the structure of private equity, highlighting the potential for unfair practices like leveraged buyouts, asset stripping, and mass layoffs, while also acknowledging instances where private equity has successfully turned companies around. They cite examples such as Toys R Us, Sears, Red Lobster, and Hilton to illustrate both the negative and positive impacts of private equity takeovers, and touch on the implications for healthcare, housing, and media industries, as well as the carried interest loophole that benefits PE managers.