OUR DAILY THREAD: Private Equity Powders Its Nose Tackle
Snort-Snort!
THE SET-UP: If “money never sleeps“ … private equity money is the financial world’s meth addict on a prolonged, indefatigable bender. To keep that bender going, it has to keep on making new deals. New deals attract new investors and those deals give PE fund managers access to their fund’s “dry powder.” In addition to being perfect for this analogy, “dry powder” is:
…the amount of capital committed by investors to a PE fund that the fund manager has not yet called for investment. It is essentially the deployable capital sitting on the sidelines, waiting for suitable investment opportunities to arise.
In other words, many PE investors can afford to make sizable medium- and long-term financial commitments to a PE-managed larder filled with dry powder.
Untapped powder has been an issue, too.
In its mid-year report on the PE business, Bain & Company estimated a whopping $1.2 trillion of “dry powder” was “waiting to be invested,” and “almost a quarter” of that idle powder “has been available for four years or more, making its deployment even more urgent.”
That may be true, but it hasn’t stopped PE from gobbling up car washes, bowling alleys, HVAC shops, dental practices, hospitals, homes, apartment complexes and trailer parks. The fact that those acquisitions have continued apace throughout a period tariff-addled uncertainty is a portend of much bigger deals to come.
In fact, it might already be here.
Earlier today the University of Utah announced a deal with Otro Capital that, if and when it is finalized, could be worth up to $500 million in capital. The University hopes it will allow their athletic program to compete with the biggest players in the multi-billion dollar business of big time college sports. The Salt Lake Tribune described the deal:
The first-of-its-kind plan for a college athletics department calls for the creation of Utah Brands & Entertainment, a company to oversee major revenue sources. Otro Capital would be the minority owner of Utah Brands and handle operations such as ticket sales, media, stadium events, concessions, and trademark and licensing matters.
The U., through its nonprofit University of Utah Growth Capital Partners Foundation, would have majority ownership of the company and Utah Athletic Director Mark Harlan would serve as the chairman of its board. The athletics department would continue to oversee student athletes and their scholarships, coaches, fundraising and NCAA compliance.
Although Sports Illustrated called the first-of-its-kind deal “groundbreaking,” the reality of PE buying a big piece of a public university may ultimately end up as a banal exercise in profiteering that only highlights the fading pretense that college athletics is anything but a smarmy business. As “Big Tennessee” wrote on Barstool Sports:
The economic model of college football and basketball is built on irrational emotion. Schools bank on getting money from boosters spending emotionally, because there really isn’t a tangible payoff short of having great seats, going to dinners at the athletic director’s house and hopefully winning championships. Those people are paying to be part of a club where the only real benefit is getting to feel good that you helped build something you love.
That model isn’t going to fly when the people spending the money are number crunchers in an office on Park Avenue. The University of Utah athletic department is now just a line item on the Otro Capital budget and they expect to see a financial return on this investment.
And therein lies the rub. PE is not motivated by nostalgia or school spirit. PE makes deals. And it has to keep on making deals to maintain the churn that it uses to tap into its dry powder and/or attract investors. Everything is a grow or die proposition, as demonstrated by the significant trail of destruction PE has left behind over the last year. Here are just a few notable flameouts via The Private Equity Stakeholder Project:
Genesis Healthcare
Genesis Healthcare, once the largest skilled nursing operator in the United States, filed for Chapter 11 bankruptcy in July 2025, burdened with more than one billion dollars in debt. The company’s collapse caps years of financial deterioration shaped by a private equity strategy of asset stripping, high-risk borrowing, and recurring regulatory violations.
Genesis’s financial unraveling reflects a familiar pattern: private equity owners extracted value through sale-leaseback deals and layered debt, while the company struggled to maintain operations.
Private equity firm ReGen Healthcare (affiliated with Pinta Capital Partners) acquired a controlling share in Genesis after a 2021 restructuring after “the severity of the pandemic dramatically impacted patient admissions, revenues and costs, compounding the pressures of our long-term, lease-related debt obligations,” according to a company representative.
A little over four years later, Genesis found itself with unsustainable levels of debt, causing the bankruptcy that led a judge to pause over 200 [pending] lawsuits alleging malpractice, wrongful death or other injury against Genesis in October 2025. This prompted a letter from US Senator Elizabeth Warren expressing concerns that ReGen Healthcare “may be using the bankruptcy system to wipe away Genesis’s debts and claims to victims by selling the company at a discount to insiders.”
Claire’s
Claire’s, the tween jewelry retailer that operates over 1000 stores with at least 17,300 employees across the U.S. and Canada filed for bankruptcy protection for the second time in August 2025. The popular store has had a relatively long history with private equity: in 2007, Apollo Global Capital purchased Claire’s for $3.1 billion in a leveraged buyout, loading the retailer with $2.5 billion of debt per 2013 filings related to the company’s first failed IPO attempt. Eleven years later, Claire’s filed for bankruptcy for the first time as it struggled under $2.1 billion in long-term debt. The restructuring that followed passed the company into the hands of creditors and private equity firms Elliott Investment Management and Monarch Alternative Capital. By the time Claire’s declared bankruptcy again in August, the retailer had over $1 billion in liabilities, according to bankruptcy filings. As the store initiated liquidation of its assets, private equity firm Ames Watson agreed to acquire Claire’s and keep the majority of its stores open.
Renovo
In 2021, Audax Private Equity combined three home remodeling businesses it had acquired to create Renovo. The firm’s announcement said: “Through its growing network of brands, Renovo’s platform provides a full range of products, installation services, and premier customer service experience to homeowners throughout the United States.”
Renovo filed for bankruptcy in November 2025. An in-depth New York Times profile on the bankruptcy explains in painful detail how the private equity model can set a company up to fail, creating long lasting damage to workers and communities in the process. In less than five years, the company went from an ambitious combination of successful companies to a bankruptcy with “$50,000 in assets and more than $100 million in liabilities, with hundreds of creditors.”
The NYT profile describes a debt-fueled buyout spree in the roofing and construction industry that has led to private equity ownership of “most of the largest roofing companies in the country.” Renovo was created by a portion of that buyout spree, a combination of seven large construction companies fueled by “about $150 million from some of the largest private lenders in America: BlackRock, Apollo and Oaktree Capital Management.”
One employee discussed how the focus on cutting costs hurt the wellbeing of the company. “The biggest expenditure is labor, so they start renegotiating with the installers and say, ‘The 10 to 12 percent you were making is now going to be 8,’” Mr. Elam said. “The A team walks out the door, and we’re left with the B’s and the C’s. So quality went down, and complaints went up.”
Around 1,500 workers at the firm were quickly terminated, many without receiving their last paychecks or reimbursements for work related expenses, as homeowners saw projects ended without being completed.
And there’s plenty more where that came from. Take a look at the thread below. - jp
From healthcare to retail, private equity’s failures pile up in second half of 2025
https://pestakeholder.org/news/from-healthcare-to-retail-private-equitys-failures-pile-up-in-second-half-of-2025/
Senator launches probe of investment groups buying up trailer parks
https://www.nbcnews.com/business/real-estate/investment-groups-trailer-parks-rcna248031
Private Equity’s Rush into U.S. Housing: Soaring Rents and Regulatory Debates
https://www.webpronews.com/private-equitys-rush-into-u-s-housing-soaring-rents-and-regulatory-debates/
Cheyenne City Council finalizes eighth county pocket annexation, OK’s zoning for private equity housing project
https://capcity.news/community/city/2025/12/09/cheyenne-city-council-finalizes-eighth-county-pocket-annexation-oks-zoning-for-private-equity-housing-project/
Private Equity’s Quiet Takeover of Ambulatory Surgical Centers
https://www.medscape.com/viewarticle/private-equitys-quiet-takeover-ambulatory-surgical-centers-2025a1000ygk
The New Private-Equity Billionaires Who Are Taking Over Wall Street
https://www.barrons.com/articles/private-equity-billionaires-wall-street-6638ac7b