No they usually only suffer under vulture funds. Most normal private equity funds only fire/lay off the useless "middle manager" class. Basically like what Musk did when he took Twitter private. Fire the useless workers who don't do anything but entrench themselves in corporate bureaucracy, usually actually pay DOWN debt to some extent, and then pump hundreds of millions to billions into the business to upgrade and scale it to make it more valuable. The way private companies are valued typically is by comparing them to a similar public company and using something like price/earnings ratio. So the formula for private equity is stupid simple. The more the company makes, the more valuable it is. So by laying off the worthless middle managers everyone hates anyway, and then pumping in billions to scale the business faster than it ever could on its own, they can typically 4-5X their money over the course of 3-5 years.

MOST private equity firms don't see a penny of profit on investments until they exit. They typically reinvest near 100% of the profits from companies they buy out back INTO the business during the improvement/scaling phase. So any given investment won't earn a penny in profit for 3-5 years and then they make all their money upon the sell of the company to someone else who wants it for the cash flow at that point because it's a fully matured and highly scaled business.

So MOST private equity firms actually cause the companies they buy to get rid of useless employees, and hire more productive employees. Often they'll even give incentives to employees like higher pay, bonuses, etc. In order to motivate them. Not anything ground breaking, they're not gonna double their pay or anything, but most companies targeted aren't exactly run optimally so there's lots of internal greed and inefficiencies that they work out of the system in order to maximize the value of the company.

Private equity isn't like, one uniform block, it's hundreds of different funds and companies. You only ever hear about the ones that end up bankrupting companies because they act as vulture funds. Using the figures this woman uses (3.8 trillion in bad loans) that's only roughly 25% of all private equity assets ($15 trillion plus). Meaning 75% of private equity operates like I've described, and most of the time you'd never hear about the companies they own. Usually regional insurance companies, machining/tooling companies, privately owned steel and chemical plants, car dealerships, smaller cell phone carriers, fiber optic lines operators, smaller trucking companies, etc. etc.

When she's going on about "everything" being touched, she's exaggerating because again, 75% of the funds in the industry DO NOT operate like this. Don't get me wrong, 3.8 trillion is STILL a massive number and probably enough to have a redo of 2008 but worse. But it's not like the majority of private equity firms are part of this process.

What we SHOULD be talking about it the massive 4.7 trillion dollar CMBS (commercial real estate Mortgage backed securities) market that has been holding on by a thread the past 4-5 years. Office real estate in particular is BARELY clinging to life thanks to hybrid work and work from home. It's so bad you've had buildings that were worth a billion dollars a few years ago get foreclosed on and sell for around 10 million. That's a 99% decrease in value. And it's only been getting worse. Those types of mortgages are typically over 5 years, so once they all come due this year and next year, it'll be 2008 but 10X worse since office will drag EVERYTHING down with it. The only good part of that is that residential will probably crash and make housing more affordable, but everything else will crash too.

Combine that with this vulture fund activity and we're probably in for a crash worse than the one that caused the great depression.