Options for struggling companies, other than private equity.
The Issue
Not-so-fun fact: Some businesses are going to fail. Markets shift, technologies evolve, and needs change. Failure is part of the economic cycle. But the way we respond to these failures—the so-called “healing” techniques employed by private equity and profit-maximizing vultures—has become a deeper wound to society than the failure itself.
Instead of addressing root causes or guiding these companies toward new life, modern interventions tend to extract whatever value is left and leave scorched earth behind. Workers are laid off en masse, pensions gutted, suppliers stiffed, and communities hollowed out. This is not the only answer, but we designed our system this way. What the fuck—we did this to ourselves.
We are witnessing a quiet dismemberment of our communities—the interconnected fabric of people, places, and purposes that form our shared lives.
Private Equity’s Clusterfuck Playbook
It starts when a private equity firm spots a distressed or undervalued company. That firm swoops in (think vulture)—not to invest in innovation or long-term growth—but to leverage, extract, and exit.
Here’s how it typically plays out:
The Buyout – The firm acquires the company through a "leveraged buyout," using the struggling company's assets and cash flow to finance the purchase. The company is saddled with debt from the start.
The Gutting – To pay off this debt and satisfy investors, the new owners cut costs (at all costs): mass layoffs, store closures, real estate liquidation, R&D elimination, and neglected maintenance. The result is a hollow shell that appears profitable—but only on paper.
The Extraction – They drain the company's cash reserves through management fees, dividends, and consulting charges—money that could have kept operations stable.
The Implosion – Within a few years, the debt burden becomes unbearable. Bankruptcy follows. While executives collect their bonuses, workers receive pink slips. The firm moves on to its next "opportunity."
This pattern is depressingly predictable, yet we watch the same train wreck unfold again and again: Toys "R" Us, Sears, RadioShack, Payless, dozens of hospital chains. Thousands of jobs vanish, and with each collapse, the social capital, local economies, and emotional trust built over decades get torched for a one-time payday.
So What Can We Do Instead?
There are no silver bullets. But there are better tools—tested, scalable, and rooted in collective resilience rather than individual greed. Here are three that deserve our attention:
Worker Ownership & Cooperatives
When employees have the opportunity to buy out their workplace—whether during a crisis or through long-term planning—they prioritize stability, community, and reinvestment. This model aligns incentives naturally: when the company thrives, workers benefit.
Case in Point: New Era Windows in Chicago was reborn as a worker-owned co-op after its original factory was abruptly shut down.
Just Transitions & Retraining
In sectors like coal, manufacturing, and retail, collapse is inevitable. Rather than ignoring this reality, we can invest now in reskilling programs, relocation support, and economic diversification to cushion the impact and create new opportunities.
Case in Point: Colorado's Office of Just Transition provides targeted funding and support for coal workers and their communities as mines shut down.
Public & Community Buyouts
Sometimes the public—or the local community—offers the best solution. Municipal governments, development trusts, and crowdfunding campaigns have preserved essential services and infrastructure where private buyers have failed.
Case in Point: The city of Preston in the UK transformed its procurement strategy to favor local and cooperative businesses, ensuring that wealth circulates within the community.
The Battle Card: Fix vs Extract
Option | Goal | Who Benefits | Risk of Collapse | Long-Term Stability | Local Resilience | Incentives Aligned? |
Private Equity Takeover | Maximize investor return | Shareholders, Execs | High | Low | Weak | No |
Worker Cooperative Buyout | Preserve jobs & control | Employees, Community | Medium | High | Strong | Yes |
Just Transition Programs | Support displaced workers | Workers, Towns | N/A | High (via pivots) | Strong | Yes |
Public/Community Ownership | Sustain essential services | Citizens, Workers | Low | High | Very Strong | Yes |
A Call to Action: Choose Rebuilding Over Extinction
There's no easy fix. Our economy rewards speed, profit, and disposability. If we fail to disrupt this take-no-prisoners bullshit—there will be nothing left to save.
Start by learning. Share your knowledge. Support your local co-op. Advocate for policies that fund just transitions. Push your city to invest locally. Ask your employer about ownership options. While some businesses will inevitably collapse, how we respond determines whether we build back something better—or merely bury the ruins.
Let's stop mistaking value extraction for value creation. Let’s be a bit kinder to ourselves and each other.
Sources
The Private Equity Collapse of Toys “R” Us
The Atlantic – The Demise of Toys ‘R’ Us Is a Warning Explores how private equity ownership led to the retailer’s downfall.
In These Times – How Private Equity Killed Toys “R” Us Details the role of private equity firms in the company’s bankruptcy.
Axios – Toys R Us bankruptcy lawsuit could shake private equity Discusses the implications of the bankruptcy lawsuit on private equity practices.
Worker-Owned Cooperatives: New Era Windows
New Era Windows – Our Story Official account of the worker cooperative’s formation and mission.
Wikipedia – New Era Windows Background information on the cooperative’s history.
Project Equity – New Era Windows deal structure Insights into the cooperative’s ownership model and structure.
Just Transition: Colorado’s Office of Just Transition
Colorado Department of Labor & Employment – The Office of Just Transition Overview of the state’s efforts to support coal workers and communities.
BlueGreen Alliance – Lessons Learned from the Colorado Office of Just Transition Analysis of the office’s strategies and outcomes.
UNM Newsroom – Supporting communities impacted by climate change mitigation Discusses the broader implications of just transition efforts.
Community Wealth Building: The Preston Model
Preston City Council – What is the Preston Model? Explanation of the community wealth building approach implemented in Preston.
CLES – The Preston Model Insights into the model’s methodology and impact.
Democracy Collaborative – The Preston Model ten years on Reflection on a decade of community wealth building in Preston.