Economics

No, Private Equity Isn't Ruining Your Sandwiches, Your Apartment, or Grandma's Nursing Home

Much of the hatred directed at private equity is just a familiar form of opposition to free markets.

Daniel Foster | From the November 2026 issue

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In 2024, Blackstone—the world's largest private equity firm at the time, with $1 trillion in capital under management—announced it was buying the sandwich chain Jersey Mike's. Founded on the Jersey Shore in 1975 by a 17-year-old Peter Cancro, who purchased the first shop with a loan from his high school football coach, Jersey Mike's had become one of the fastest-growing restaurant brands in America.

If you're from the Garden State, as I am, you might bristle a bit at the authenticity grab of Jersey Mike's toponym, as I do. The Original Italian, after all, doesn't display the level of New Jersey cured-pork sandwich artistry available at Dolce & Clemente's in Robbinsville, Michael's Salumeria in Lyndhurst, or Fiore's House of Quality in Hoboken. But it's sturdy enough, dependable, and less sad than the fading Subway footlong.

Maybe it was inevitable that after Jersey Mike's private equity acquisition, social media posts from sandwich enthusiasts began popping up alleging that portion sizes had shrunk and quality had declined, including from a TikTok user who held up what he said was a $9 sandwich between two fingers and addressed the camera directly: "This, my friends, is what $9 gets you." The posts went modestly viral on Instagram and Reddit and generated coverage in outlets from Yahoo! Finance to the food-ranking site Sporked. One Instagram Threads user pronounced, apparently before eating anything, that "private equity destroys everything it touches" and that the chain would be "sold for parts within five years."

#AmPm #JerseyMikes #LunchLady I shoulda went to Firehouse!

♬ original sound - Dion IKhanic

The outcry was such that newly installed CEO Charlie Morrison had to go on the record acknowledging he was, as reporting in one restaurant trade publication put it, "well aware of the often-negative perception surrounding private equity firms, especially in the food business" and that he was tracking the complaints.

But nothing had changed—the sandwiches and prices were the same. "We're not going to reconfigure, re-engineer, change, modify the brand. That's not happening," Morrison said.

Jersey Mike's revenue increased by more than 10 percent in the first year after the Blackstone deal, and in July the firm went public, raising $1 billion in the largest U.S. consumer initial public offering of the year. Now the brand is bigger than ever, with hundreds of new locations. In 2026, it broke Chick-fil-A's 11-year run as the top-rated fast-food restaurant in the American Customer Satisfaction Index.

This is a familiar story. If you listen to anti–private equity outfits like the Private Equity Stakeholder Project or ProPublica or usual-suspect gadflies on the left, private equity is just another mutation of predatory capitalism: "vampires" engaged in "legalized looting" per Sen. Elizabeth Warren (D–Mass.); "vultures" embodying "corporate greed at its most disgusting" by the lights of Sen. Bernie Sanders (I–Vt.).

Critics marshal an impressive breadth of bogeymen to make their case, seizing on private equity's infiltration of everything from hospitals to prisons to for-profit schools, and their reliance on extractive financial gizmos like "leasebacks," "roll-ups," and "dividend recapitalizations" to make billions for the few while zombifying the portfolio companies relied upon by the many.

What these critics want you to believe is that there is something uniquely bad about private equity, that it's a poisonous form of hypercapitalism. But case studies and a review of the evidence tell a different story. Private equity isn't a panacea, and it isn't without flaws. But from Italian subs to nursing homes to state pensions, it has plenty to offer both capitalists and consumers. Viewed in this context, it's clear that much of the hatred directed at private equity is just a familiar form of statist opposition to free markets.

Bond, Junk Bond

What we now know as private equity dates back to the 1980s and a loose confederacy of financiers who dealt in leveraged buyouts. In basic terms, leveraged buyouts are a process by which a group of investors acquires majority control in an existing business by pairing a small base of capital with a large helping of debt.

A pioneering analyst and booster of the novel financial structure, Michael C. Jensen of Harvard Business School, argued that replacing diffuse and often detached shareholders with a small cadre of highly incented owners would tend to produce lean and mean organizations, reducing overhead, improving management, and, of course, increasing profit.

Unfortunately, that early group of raiders included the flamboyantly toupeed Michael Milken and his outfit Drexel Burnham Lambert. Milken figured out that the debt issued by companies that were too risky, or too small to earn investment-grade credit ratings, nevertheless paid high enough interest rates that a diversified portfolio of them could outperform safer bonds even after accounting for defaults.

These were called junk bonds, and Milken made himself the market for junk, operating from a signature X-shaped trading desk 3,000 miles from Wall Street in Los Angeles. The sector he created became the rocket fuel for leveraged buyouts. You borrowed against a company you didn't yet own, bought it with that money, and paid the debt back from the company's own cash flows. It was extraordinarily profitable and, allegedly, also occasionally criminal. Milken pleaded guilty to securities fraud in 1990. Drexel Burnham Lambert went bankrupt the same year. And the junk bond market that powered the whole enterprise seized up, ending the first wave of leveraged buyouts.

But like virtual reality or online pet food sales, leveraged buyouts reemerged with a vengeance a decade and a half later, and the age of private equity began in earnest.

The modern private equity firm operates through what the industry calls "closed-end funds." Think of these like film production companies formed for a specific project and dissolved when a film is finished, whether or not it is sold to a distributor.

Private equity funds deal in companies rather than talkies, but like many an indie film funding vehicle, a private equity fund is structured as an L.P., which limits participants' liability to what they put in, with two kinds of stakeholders: The fund's "general partners" (G.P.s) are like the directors, responsible for actual decision making and overall vision. The "limited partners" (L.P.s), which can be anything from pension funds and university endowments to ordinary rich guys, are like the executive producers, financiers with a stake in the outcome but no say in the day-to-day.

Private equity funds exist for a fixed term, often 10 years, after which point the general partners must actually sell or otherwise........

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