"Death by a thousand cuts:" How private equity is killing small businesses

Canadians are generally aware of the giant oligopolies running various industries – banks, airlines, telcos – but many likely aren’t familiar with the silent force killing competition: private equity.For some time, these asset-managing firms have been rolling up small businesses across the economy – from veterinary and dental practices to retirement homes and even cemeteries – in the interest of pulling value from them.This extraction generally comes in unfriendly terms: worse products and services for consumers, higher prices, plus lower wages and layoffs for employees. And because the individual business acquisitions are typically small, competition authorities don’t notice until it’s too late. Rachel Wasserman, a Toronto-based lawyer who used to work in the field, is among those raising the alarm on the need for new rules that govern industry roll-ups. Without them, small businesses are going to find it increasingly hard to start up and to sell out to anyone but private equity firms.As she explains on this episode of the Do Not Pass Go podcast, every-day consumers have a role to play too in terms of where they spend their money.Further reading for articles and papers mentioned in this episode:Wasserman’s white paper on private equity for the Canadian Anti-Monopoly Project.Toronto Star op-ed on the “new giant story of capitalism.”The New York Times op-ed on how private equity is “gutting America.”CBC story on veterinarian consolidation and resultant price increases.University of Waterloo study on deaths in private equity-owned retirement homes.Do Not Pass Go is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. Get full access to Do Not Pass Go at www.donotpassgo.ca/subscribe