Builders Build, Private Equity Swallows. Shits out Bones
Private Equity is a clean cut villain. Decked in expensive suits and posh scents they promise to care. Promise to bring back the institution of yore. But what they really mean is they’ll take a knife to it. Carve out its limbs and sell them off to another murderous sod like themselves and call it progress.
Remember Southwest Airlines? The pinnacle of low budget airlines. That operated so efficiently that business majors couldn’t stop writing case studies. And thick rimmed analysts couldn’t keep their member in their pants as they stared at its growth chart on their computers.
Airline companies like Southwest got hit with massive haymakers during the pandemic. As they were trying to recover, they got hit by another one. This one wasn’t made in a lab. But by nature. Storm Elliot kept their fleet grounded. Resulting in long delays and angry customers. As they looked to grab a straw that would prevent them from sinking, Elliot Capital reached out, caught their hand, yanked it and made it their bitch all in one fell swoop.
The management changed. The prices increased. The service went to hell. So did the experience. The smiling cashier who greeted customers was sacked and replaced by a self check-in kiosk.
Three decades of work, gone in an instant. Now she works at a nearby Walmart. Asking if you need a bag for your groceries.
Some eagle-eyed fliers recognized the turning tide and jumped ship. But by the time, the vast majority realized, the company was a husk of its former self.
In all movies, the good guy finds a way to win. Not here. Because there is no good guy bad guy bullshit here. The only thing that matters here is money. Did the company make money? Good. Else it’s off to the slaughterhouse.
And it’s not just airlines. Private Equity ogles at everything with a cash flow. Doesn’t matter what you sell, how many families depend on you. How you serve your community. It’ll purchase it, gut it and despite your protests there’s not a damn thing you can do about it. Toys R Us was just another body on the pile.
They failed to innovate. The big box stores encroached on its market. Brought goods from cheaper places. Sold them cheaper too. No matter what they did, Toy R Us couldn't stop hurtling headfirst into the woodchipper. So, they sought out help.
And help came, in a double-faced manner of Private Equity.
Soon after taking it over, and stripping it to the bone, Private Equity realized that there was little money to be made. So, they loaded it with debt. Like a boulder to a dead body and dumped in the ocean. Now, a celebrated brand, that was around for seventy years, awaited its fate and hoped for a swift death.
Tomorrow, as you drive by the now empty store realize that it didn’t die. It was killed. And it’ll make no difference to you. Because you’ll shop somewhere else. At another brand that hopefully hasn’t been built on the floor of the last company that was killed. And the blood was wiped, of course.
That’s the deal with efficiency. It strips the soul of a company. And leaves it for crows and vultures. While the executives sit on their yacht. Cigar in mouth, counting their millions from the corpses they bled dry.