Mammoth Job Losses

A common sales pitch of private equity industry is that leveraged buyout private equity model makes businesses more efficient, unlocks value and creates jobs. In reality, millions of jobs have been lost with private equity bankruptcies such as Sears, Toys “R” Us, Mervyn’s, A& P, Claires, Joann Fabrics, Hostess Brands, Caesars Entertainment, Linens ‘n Things, Payless Shoesource, 99 Cents Store, Sports Authority, Kraft-Heinz, Party City Holdings, and others. 

 

According to a research paper released by the National Bureau of Economic Research in October 2019, when private equity firms purchase public companies in leveraged buyouts, employment shrinks 13 percent in the two years after the buyout. 

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A Private Equity Stakeholder Project study released in July 2019, aptly named "Pirate Equity," found that over the past decade, 1.3 million jobs have been lost when private equity or hedge funds have taken over retailers that ended up in bankruptcy or other economic trouble.

Some large buyouts do not go bankrupt, but job losses can still be significant. For instance, the 2015 $23 billion leveraged buyout of Kraft Heinz, by Berkshire Hathaway and Brazilian private equity firm 3G Capital, resulted in cumulative job losses of roughly 6,100 in 2015 and 2016. 

In 2024 alone, the Private Equity Stakeholder Project reported that at least 65,850 layoffs were related to private equity bankruptcies. In the first quarter of 2025, according to data from S&P Global, private equity was behind 70 percent of large corporate bankruptcies in the U.S. among companies with more than $1 billion in liabilities.

 

Examples of job losses under private equity ownership include: