If you’re an Amherst College student during the worst entry-level job market in 37 years, you’re probably anxious about your future. You also probably attend parties, and at these parties, you might meet someone who strikes you as unusually certain about their path. They say they’re “selling their soul” on the finance track, and they laugh about it, and you also laugh to play along. You ask what they will be doing in their internship this summer, and soon they’re throwing out terms like “high frequency trading,” “leveraged buyout,” “buy side and sell side,” and “mergers and acquisitions.” You don’t know what those terms mean exactly, but you’re struck by how confident they seem, how much they know about themselves and their post-graduation plans. You begin to envy this person.

A good physicist can describe their work in plain English without sacrificing complexity. The field’s jargon is therefore not a gatekeeping device, but a shorthand for fluent experts. Financial jargon, on the other hand, is designed to be alienating, hyper-technical, and eye-wateringly dry. The open secret of finance is that there is no immense complexity that the jargon is attempting to approximate; rather, the goal of the financial vocabulary is obfuscation. It’s nearly a cliché at this point that if we described what much of Wall Street does in plain English, we’d understand the degree to which large swaths of the industry rest on deception, fraud, and shortsighted thinking. In few industries is this clearer than in the case of “private equity” (PE).

If a group of people takes over a business, racks up insurmountable debt, fires its employees, then sells all its most valuable assets for a profit, we call this group of people “the mafia.” In the organized crime world, this practice is known as a “bust out,” a form of theft that not only steals whatever someone has, but also destroys all means they would have to make the money back. In “The Sopranos,” when Tony and the gang seek to force Davey, a sporting goods store owner, to pay back his gambling debt by springing a bust-out on his business, Davey is driven to the brink of suicide.

“Bust-out” is an evocative term; from the word alone, you can guess that it’s some sort of crime. In comparison, “asset stripping” at a “private equity firm” running “leveraged buyouts” evokes little besides confusion. The only difference between a “bust-out” and a “leveraged buyout” is scale. While the former is accomplished by violent organized crime groups targeting small businesses, the latter is accomplished by wealthy firms targeting corporations. The first is strictly illegal; the second is perfectly legal. If you run a bust-out, you’re a member of an organized crime group; if you run a leveraged buyout, you’re a member of a private equity firm.

One cannot live in America today without having some contact with private equity. The industry now accounts for 7% of gross domestic product growth, and the industry’s size is attributable to its pioneering of the leveraged buyout. Here’s leveraged buyout 101:

Identify a company or industry with financial anxieties and valuable physical assets.
Go to the bank and ask for a loan to buy a majority stake in that company, and when the bank asks for collateral, put up the company itself (which you don’t yet own). The bank is fine with this as long as you can put up around a tenth of the total takeover price.
With your new powers of ownership, do anything you can to increase the company’s value, including but not limited to firing employees, moving manufacturing overseas, cutting pensions, selling real estate, stiffing your suppliers, all the while charging fellow stockholders annual “advisory fees” for your wise stewardship.
Sell the company at the highest price possible before anyone discovers its bombed-out core, now 18% more likely to go bankrupt.

Private equity has dragged us into a new era of professional sports and fans should be kicking and screaming. The growth of streaming and global fandom has made North American professional sports teams one of the most valuable asset classes in the world, meaning that individual millionaires and billionaires have been largely priced out of the industry, creating a unique opening for private equity. For most of their history, major sports leagues banned private equity ownership because of an innate conflict of interest: for these firms, profit is the primary incentive, and when profit is primary, winning isn’t so important.

In 2019, Major League Baseball lifted what had been a universal ban on private equity investments in North American sports, and since then every major league has followed suit. Private equity pounced immediately: more than 74 North American professional sports teams now have some level of private equity involvement. With private equity at the helm, teams like the Boston Red Sox become less interested in paying the contracts of beloved star players, like all-star third baseman Alex Bregman, and decide to ship them to other teams to boost the bottom line. Private equity also encourages teams to institute “dynamic pricing,” the reason why some sports tickets cost more than others. They seek to approve paid partnerships between leagues and sports gambling sites. They complicate streaming so that watching a full season of NFL football now requires six different streaming subscriptions and 1,200 dollars. These moves aren’t tailored to the fanbase’s expectations or the team’s strategic goals, they’re just meant to make money.

But sports only scratches the surface. There’s an account on Instagram called “@cadrecorp” that gives presentations on private equity according to a simple heuristic: let X equal any arbitrary American industry, show how private equity has ruined X.

Let X = retail and learn about the killing of Toys R Us, Sears, and JC Penney, and the abandonment of their employees. Let X = restaurants and learn about PE’s role in forcing small business bankruptcy and incentivizing declining menu quality. Let X = pet stores and learn about how, after private equity bought PetSmart, Petco, and Pet Supplies Plus, the companies began working with cheaper suppliers who cut costs by employing animal cruelty. Private equity-owned pet stores have been so understaffed that whistleblowers have discovered new stacks of animal corpses in pet store freezers, the result of neglect causing animal starvation, overheating, and freezing to death in cages. Let X = youth sports, therapy, higher education (see how the University of Massachusetts Amherst paid for its newest dorm renovations), the news, veterinary care, IVF clinics, HVAC, prisons, parking lots, and climbing gyms, and you’ll find similar stories.

Little compares with what we can discover when we let X = healthcare. It’s actually illegal for for-profit investors to buy healthcare facilities offices, but over the past 15 years, private equity’s lawyers and consultants have created the “management service organization” (MSO), which circumvents the law against ownership by creating a structure whereby a private equity firm only claims to own the administrative side of the hospital, not the medical side. But the MSO is just further obfuscation of private equity’s intent; if private equity is buying a company, they’re doing so because they expect to call the shots.

Under private equity’s orders, doctors are forced to claim that “

The Amherst Student

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