The Playbook
How to Gut a Company and Get Away With It
There’s no smash-and-grab.
No gunmen in ski masks.
No vaults blown open at midnight.
The private equity heist is quieter.
More technical.
More devastating.
And it starts with a move so clever, so simple, most people never even notice it’s happening.
You buy a company — not with your own money — but with the company’s.
It’s called a leveraged buyout, but it might as well be called what it is: a hostage situation.
The private equity firm promises new investment, new growth, new prosperity.
In reality, they’re tying the company to a ticking debt bomb — and lighting the fuse.
Once the ink is dry, the “new owners” owe almost nothing.
The company owes everything.
And that’s just the beginning.
Here’s how the playbook works — step-by-step:
Step 1: Load Up the Debt
The first rule of the heist: always use someone else’s money.
The private equity firm buries the company under staggering debt — sometimes several times its actual value — using its own buildings, land, equipment, even intellectual property as collateral.
It’s like taking out a second mortgage on a house you already own… and handing the deed to someone else.
Suddenly, a stable, profitable business is forced into survival mode.
Debt service becomes the priority.
Growth, innovation, long-term planning — all of it is put on hold.
The company isn’t working for customers or communities anymore.
It’s working for the bankers.
Step 2: Slash and Burn
Debt pressure is a feature, not a bug.
Stores close.
Workers are laid off.
Pay freezes, benefits disappear, pensions evaporate.
Maintenance and modernization are deferred indefinitely.
Anything that costs money — anything that supports workers, customers, or communities — is slashed in the name of “efficiency.”
And if the company owns valuable assets, like real estate?
Those are sold off too — often in sweetheart deals that benefit the private equity firm or its allies.
What’s left is a stripped-down shell, more fragile with each passing quarter.
Step 3: Milk the Host
Before the company stumbles, the private equity firm moves in to collect its winnings.
They pay themselves “management fees” for consulting services.
They pay themselves “advisory fees” for overseeing the damage.
They sometimes even force the company to take on even more debt to issue “special dividends” directly into the pockets of investors.
It’s the business equivalent of taking out a payday loan — not to keep the lights on, but to throw a party for the landlord.
And if the company starts slipping toward bankruptcy?
Doesn’t matter.
The private equity firm has already been paid.
Step 4: Sell It, Burn It, or Let It Die
Once the host is drained — once the debt burden becomes unsustainable — the final phase begins.
Maybe they flip the company to another buyer, spinning the story of “turnaround potential.”
Maybe they take it public, dumping shares on unsuspecting investors.
Maybe they simply walk away, letting the company collapse into bankruptcy court, taking workers’ pensions and unpaid suppliers with it.
In every scenario, the private equity firm gets away with the loot.
The workers?
Out of jobs.
The retirees?
Out of pensions.
The communities?
Left with empty malls, abandoned factories, and broken promises.
Today, in False Promises, we examined the False Promise of Tariffs — how broad, poorly targeted tariffs are raising costs for American businesses without delivering real local benefit. Instead of protecting workers or rebuilding industry, they’re making it harder for companies to survive — while doing nothing to address the underlying rot.
Private equity runs the same kind of scam.
They promise to rescue companies.
In reality, they load them down with debt, strip them of assets, and leave them weaker than before — all while walking away richer.
In both cases, the price is paid by the very people the promises were supposed to help.
Coming up tomorrow:
The First Big Score: Killing Toys R Us for Profit.
(The inside story of how Wall Street took down a beloved American brand — and why no one ever paid the price.)