In 1959, a veteran and son of immigrants opened his first furniture store in the Detroit-metro area. By 2015, the company founded by Art Van Elslander had nearly 100 stores across the Midwest, and Shirley Smith was a happy employee of one of them.
But Wall Street private equity destroyed Art Van Furniture in one-tenth the time it took to build it — and Shirley’s job along with it.
Private equity, which used to call itself the “leveraged buyout industry,” raises money from pension funds, endowments, and wealthy individuals. They use this money plus a lot of debt to buy companies. Sometimes they raise prices for consumers. They almost always squeeze workers. Other times, they sell off valuable assets to pay themselves. They usually walk away in three to five years.
In 2017, Art Van was acquired by private equity firm TH Lee Partners, which squeezed the company for cash any way it could. It sold off the company’s real estate and forced Art Van to lease it back. Under TH Lee, Art Van also started paying its bills late, or not at all, which interrupted furniture deliveries and stalled revenue growth. While the new owners assured employees they would save the company, in fact they were preparing it for bankruptcy.
See the story of Shirley, Art Van, and private equity in this short video:
Over the next month, Americans for Financial Reform will be releasing a series of videos on private equity, and the terrible impact of this Wall Street invention. Private equity has destroyed retail jobs that Black and Brown people rely on — Art Van isn’t the only victim — contributed to the affordable housing crisis by raising costs for mobile homes, hollowed out local newspapers, and raised costs for families who want to speak with loved ones in prison.
The list of abuses of private equity grows daily. It has harmed national security, shortened life expectancies in nursing homes, and increased health care costs. These financiers buy up smaller companies to create monopoly power and raise prices. All in the name of profit.
For political and economic reasons, reforming Wall Street private equity must be part of the progressive agenda for economic justice. Polling demonstrates that Wall Street reform is overwhelmingly popular with Democrats and wildly popular with Republicans and independents. Private equity is also a “billionaire factory,” in the words of one prominent scholar, contributing to the massive concentration of wealth that warps our economy and politics.
In 2019, Sen. Elizabeth Warren and Rep. Mark Pocan introduced the Stop Wall Street Looting Act in an effort to curb the worst abuses of private equity. Sign the petition to support reform at stopwallstreetlooting.org.
To stay involved, follow Americans for Financial Reform on Twitter and Facebook to learn about how you can continue the fight against private equity. It’s time to raise our voices to demand a just and fair economy.
To learn more about Wall Street’s private equity barons, read Carter Dougherty’s earlier piece for DemCast.
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