The Hustle

Private equity firms are gobbling up companies and winning over the market

Private equity firms are popping up everywhere, but are investors ignoring that warning signs in favor of potential gains?

October 4, 2019

Smith Collection/Gado/Getty Images

In the decade since the financial crash, big banks and hedge funds have buckled under new regulations and public ire. Meanwhile, private equity (PE) — a younger industry that operates largely under the radar — has emerged as the uncontested winner. 

PE funds are now behind all kinds of businesses, from pet stores to real estate to dermatology. Talk about a diverse portfolio. 

It’s like HGTV for private business

PE firms’ MO is to buy up companies, slash their costs, then flip them for a profit… minus the tears and cameras. There are a couple things to know about how this kind of investing works: 

But… the pay’s good. For now. 

While once-safe investments are struggling, PE funds have consistently brought in above-average returns. The success of the industry has inspired an uptick in the number of firms gambling with debt — and many investors are ignoring the warning signs in favor of possible gains… sound familiar?

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