As we all trudge through the chore that is the summer internship search, inevitably regretting not having put in more effort towards it during J-Term, I can’t help but notice how Middlebury’s finance recruitment culture always seems to take center stage. Why does securing an internship in private equity (PE) always seem to grant automatic peer respect in a conversation, leaving behind a tinge of jealousy or even self-deprecation for not having achieved the same? Is it because people actually think private equity is a fulfilling future for themselves, or is it because PE has a nice, prestigious, wealthy ring to it?
Students breaking their backs for a career in private equity should understand that the overextraction and lack of regulation in the industry lead to losses in quality, individuality, and, most importantly, the externalization of risks onto patients, consumers and the climate.
The basic idea behind private equity is that firms pool capital from wealthy individuals and large institutions (such as university endowments and pension funds) and use it to acquire private companies. They work to make those companies more profitable, then return the earnings to their investors. This pressure to return to investors drives the race for short-term profit and maximum extraction. Most firms even buy multiple businesses in the same industry, creating the illusion of choice but running every company the exact same way. Within three blocks, there might be three coffee shops, two laundromats, a dentist office and a hospital, all owned by the same private equity firm. Authentic Brands Group owns Lucky Brand, Champion, Guess, Dockers and Sperry in the same portfolio, likely structuring each business model the same way, using the same manufacturers, but capitalizing on the household brands to feign differentiation.
PE now owns over 20% of the economy, says Harvard professor John Coates, and we have no idea because they’re all hiding behind our most beloved store names. Private equity is just too private. Owning such a large chunk of the American economy is dangerous without any regulation or reporting measures, and it jeopardizes market competitiveness, unleashing the worst side of capitalism. We’re losing control over the American economy, and we have no choice but to let it happen because private equity-owned businesses dominate industries essential to our day-to-day lives: healthcare, apartments, groceries, manufacturers, and distributors. It’s become private equity’s world, and we’re just living in it.
Ever wonder why you walk into Blank Street or Pop-up Bagel, a Cava or Sunglass Hut and it all feels like the same store with a slightly different font? Sans-serif scripts, felt board menus, subway tile walls with slatted wooden counters. They’re not designed like that because all of your local storefront owners have a similar, trendy eye; it’s that those companies have been bought by PE and are being remodeled to whatever look and feel is making the most money at that moment. Or maybe you haven’t noticed — that’s exactly the intent. These stores are modeled off companies that you’ve grown to find comforting and trustworthy. But PE is doing everything it can to make you a loyal patron without the company having to put in the funds and effort required to improve its product.
This rejection of personality or individuality contributes to that familiar monoculture we all feel closing in on every aspect of our lives. The lack of emphasis on product improvement and the tunnel-vision focus on squeezing as much profit as possible from a company at the lowest cost are the most dangerous aspects. It’s what leads to “enshittification”, a term coined by author Cory Doctorow, which exposes how tech companies deliberately degrade software services and online platforms to squeeze the most profit out of users and advertisers. The same concept applies to physical products: Once a company figures out how to lock you in and gain your trust, they can start pricing higher and higher and care less and less about what they’re selling you.
It is particularly disturbing that PE restructuring methods, such as staff reductions and cuts to operational funds, can come with a human toll. Take the healthcare sector: now we’re not just considering the loss of livelihoods through job loss or cost-of-living crises, we’re talking life and death. A 2021 University of Chicago study found that PE-owned nursing homes, hospitals and emergency rooms experienced significant increases in mortality after PE firms took ownership. Private-equity ownership of nursing homes increased the short-term mortality of Medicare patients by 10%, which implies about 20,150 lives lost over the 12-year sample period. The idea that finance gurus (who have spent most of their lives at a laptop) can do a better job of structuring profitable businesses than industry professionals is completely skewed, and it’s perpetuated by the respect we give to people in high-status finance jobs.
So you want to go into private equity? I’m not calling you a bad person — there are firms out there doing the right thing (consider smaller impact investment firms with responsible reporting practices, like EQT, Blue Earth Capital or Riverside). But is enabling the societal net-negatives that the most elite firms breed the best use of your good education and goodwill? Can you justify the paycheck while simultaneously contributing to the worst parts of capitalism and exacerbating problems like climate change, inflation and inequality? Feigning ignorance isn’t an option at a place like Middlebury, even if “everyone else is doing it.” If you believe PE is your calling, go for it, but don't confuse prestige for purpose. Your incredible work ethic, $94,000-per-year education and the privilege of having the financial freedom to choose a meaningful career should be used to benefit the world. I believe that profit can be synonymous with authenticity and innovation, but PE advocates for the opposite.
