Private Equity Cannot be Our Future

Alex Gervais ’28

Exec. Opinion and Design Editor

Another season of LinkedIn posting is upon us. All of us are “overjoyed,” “excited” and even “humbled” for our next professional opportunity. Our Bantams are flying the coop for the summer, interning in big cities across the country and the globe, setting ourselves up for successful professional careers. We’ll intern for inspiring leaders on Capitol Hill or research in groundbreaking labs or write the code that launches the next big app. The potential for our summer—much like Phineas and Ferb’s—is endless. 

Yet among this celebration of our professional accomplishments I see a worrying trend emerging among our peers: more and more Trinity students seem to be considering futures in private equity. Private equity (or PE as those in the industry call it) is all about efficiency, at any cost. PE firms buy and manage companies before selling them, oftentimes buying low on failing companies before cutting headcounts and reducing quality of service in order to chase profit. 

PE targets industries where they see excess consumer surplus, where they think people are getting too good of a deal. Over the past few years PE has been aggressively pursuing veterinary clinics, spiking costs for well-visit checkups for family pets and reducing the number of employees, leading to declines in standards of care and increased wait times. PE has also been instrumental in the downturn of medical care in America: the Steward healthcare collapse was entirely the fault of PE mismanagement, leaving the healthcare of millions of Americans at risk. It’s even afflicted our dining options: PE is the reason the sandwiches at Jersey Mike’s have gotten so awful and why Red Lobster nearly went under. It’s rotting the American consumer experience from the inside out. 

I ask my fellow Bantams not to consider a future in PE and the College to stop embracing the industry. I understand that it’s tempting to work for PE firms because of the seven figure bonuses, the esteem of a Blackstone or a Bain Capital, but it is not worth the human cost. Not only is PE inflicting innumerable damage on the pocketbooks and well-being of Americans, it’s also stealing some of our best minds. Internships at these firms are incredibly competitive, with some firms boasting a less than 0.5% acceptance rate. Our best connected and most talented economic minds are spending their summers contributing to PE’s malfeasance. It’s no crime to go into the finance sector: banking and investment management may not be my idea of the world’s best career (surprise, surprise), but they’re necessary parts of our capitalist system. Spending your life trying to beat the market by trading Armenian wheat futures might be what I think is an unfulfilling career, but at least it isn’t actively and purposefully hurting people. One can’t say the same for PE, an industry that makes its money off of increasing costs for consumers and weakening organized labor. 

Not only is PE a drain on our society, it’s becoming actively worse at what it’s supposed to be best at: generating revenue. Ivy League schools have begun lessening endowment reliance on PE funds as roll-ups have become increasingly less profitable and PE funds begin underperforming the S&P 500. If there was a time to go into private equity it was a decade ago, not now. It seems the industry is drying up, leaving in its wake a series of hollowed out companies and empty consumer promises.
But at its core, PE makes us less human. I follow a comedian on Instagram by the name of Johnny Hilbrant. Known by fans as “The PE Guy,” he does satirical impressions of PE types from different cities and towns: from Hingham to St. Louis to Greenwich they all have the same annoying, overzealous, self-obsessed candor. His kids Tarantino and EBITDA (an acronym for earnings before interest, taxes, depreciation and amortization for those of you who are still sane) are the highest of achievers, Tarantino learning how to ski before he could even walk. The PE guy is a representation of everything that is wrong with the industry: the insane wealth, the annoying attitudes, the solely ego driven motivation for success. I warn my fellow Bantams, do not become the PE guy, chart your own course.