This conversation was first published by the Halifax Examiner on March 28, 2025.
Private equity firms have been in the news this year.
As I reported here, Canada’s oldest retailer, the iconic Hudson’s Bay Company, has declared bankruptcy and has been liquidating all but six of its 80 stores across the country.
Like so many other retail outlets before it, The Bay succumbed to the private equity buyout-and-bankrupt scourge. The Bay is owned by NRDC, a large U.S. private equity firm owned by real estate mogul Richard Baker, who has “driven a set of coffin nails into The Bay.”
Canada’s new Prime Minister Mark Carney has also been scrutinized for his private equity background. Before becoming leader of the Liberal Party of Canada and then prime minister, Carney spent nearly five years as chair of a private equity firm – Brookfield Assets Management – and there have been criticisms of the way Brookfield operates, and its use of the tax haven of Bermuda for two of its funds.
Many Canadians who are active on the stock market – including Conservative leader Pierre Poilievre – are invested in Brookfield through exchange-traded funds. That’s how pervasive large private equity firms have become.
In a recent report for the Canadian Anti-Monopoly Project (CAMP), author Rachel Wasserman laid out some problems with private equity, or more specifically, with “buyout private equity.” The buyout private equity playbook involves the “leveraged buyout,” when a firm borrows heavily to purchase healthy mature businesses, including consolidating or “rolling up” small independent businesses to take control of an entire sector (such as veterinary services, funeral homes).
The playbook includes saddling the acquired company with the debt used to acquire it, increasing profitability by cutting staff and expenses, stripping it of real estate assets if it has any, and renting premises back to the company. Buyout private equity firms profit massively from short-term serial investments, and then flip them, usually to another private equity firm. In some instances, however, their profiteering drives the company into bankruptcy.
Witness the demise of The Bay.
But it’s not just the owners and employees of the private equity firms who are benefiting from this parasitic playbook. Anyone receiving a pension may well be unwittingly complicit in the private equity business. Canada’s Pension Plan and the Ontario Teachers’ Pension Plan, for example, are two of the biggest investors in private equity in the world, because it is usually very profitable – even if, sadly and ironically, it often harms workers.
After I reported on the immense economic and social damage that buyout private equity causes, I received a lot of feedback from readers who expressed frustration about the problem, and asked what – if anything – could be done to rein in these firms.
I wanted to know the same thing.
So I got in touch with Jon Shell, chair of Social Capital Partners, an independent Canadian organization that sees extreme wealth inequality and concentrated ownership of assets in Canada as “big problems” it wants to help fix.
