Two years ago, we discussed private equity’s impact on newsrooms and the various investigations that have accused the industry of inflating the housing market and profiteering in healthcare. We have also recently discussed how private equity is fueling data center growth.
What’s truly fascinating about the private equity industry is the breadth of markets it reaches, as it is involved in a lot more businesses than many may realize. So today, let’s talk about the reach of private equity.
Not so small of a business
According to the American Investment Council, an advocacy group for the private investment industry, private equity is “fueling thousands of small businesses that are the lifeblood of local communities.” Its 2024 report, which highlights the economic contribution of private equity to the U.S., says 85% of private equity-backed businesses were small businesses with fewer than 500 workers and that the median business in that sector employed 72 workers. A reporter from Mother Jones reported similar numbers in 2022, stating that “nearly 12 million workers – one in every 14 employees in the United States – collect paychecks from companies run by private equity.”
So where exactly are these small businesses? Odds are you live close to one, or likely even frequent one and don’t even know it. In the health care sector, firms have gobbled up practices from dental and eye care to specialists such as dermatologists and fertility clinics. You can also find retail stores, car washes and funeral homes owned or backed by private equity firms, right in your community. And it isn’t just metropolitan areas – there are plenty of these businesses in rural areas as well. For example, of all the private equity-owned hospitals in the country, over a quarter of them serve rural populations.
As one academic told the New York Times in 2023, “Every time there’s an opportunity for making money, [private equity] is going to move faster than everyone else.” This is why you can find private equity firms involved in mobile home parks, apartment complexes and neighborhood grocers. If there is money to be made, private equity will jump right in.
Price hikes
Despite all of these small businesses being situated in different sectors and located in different places throughout the country, one common trait tends to appear after private equity becomes involved: prices increase. For example, shortly after a small funeral home in Tucson, Arizona, sold its business to a private equity group, the price for a cremation rose from $425 to $760. A study has found that prices at primary care practices affiliated with private equity companies were 8% higher than at independent practices. And residents at a mobile home park faced 12% rent increases after a private equity firm purchased their park.
It’s safe to say that consumers are not the ones benefiting from private equity’s involvement in their lives. As one researcher told Slate, “Even if you do develop efficiencies, the profits don’t go to the patients, and they don’t go to the clinicians, they don’t go to the practices. They don’t get reinvested. They go to investors.”
A short trip straight to bankruptcy
Recently, Leonard Green & Partners (LGP) acquired all outstanding shares of Mister Car Wash in order to take the public company private. It was noted that going private would allow the company to “invest in operations, technology and customer experience initiatives without the constraints of public markets.” While LGP is a private equity firm that manages $85 billion in assets, its track record with businesses doesn’t bode well for Mister Car Wash’s employees and customers.
LGP acquired the craft store JOANN Fabrics in 2010, and took it private. Unfortunately for many crafters, after JOANN declared bankruptcy in 2024 – then again in January 2025 – it wasn’t long before the company announced that it would close all of its stores and lay off 19,000 employees. LGP also owns The Container Store, which declared bankruptcy in late 2024.
The bankruptcy pipeline isn’t exclusive to LGP. A study found that “ten of the 14 largest retail bankruptcies since 2012 have been at private equity-owned companies.” Additionally, private equity has played a role in about half of the largest U.S. corporate bankruptcies in 2025, and yet those firms often emerge with more money to invest in their next business venture.
