“I don't think it's the industry of rule. I've never been in a meeting where somebody said, well, let's do that. It's good for us, but it's bad for somebody else. No way.”
Freakonomics Radio · Ideas & Essays · October 2026
Stephen Dubner asked the former private equity partner why his book left out research on harm to workers and patients after private equity buyouts. Khajuria said plenty of public companies misbehave too, from Enron to Lehman Brothers, and that bad practices shouldn't be blamed on private equity as such.
Transcript
my God, this guy wants to buy an insurance company. What? But didn't an insurance company just go bust? I don't know. So much work. In that lies value. Complexity is a source of value with private investing.
…homes, hospitals, doctors' practices, on and on. Many of the outcomes there have also been argued to be significantly negative. I would think that's a major concern for anyone, even if they are just a retiree looking for an investment. But I didn't read about any of that in your book. Why not?
…you look at AIG or whether you look at Lehman Brothers, none of these things are private equity. And these things have caused enormous problems over the years. And so you've got to be pretty open about it and say, if you find a particular set of individuals or firms doing things they shouldn't do, of course, that shouldn't happen. And that should be addressed in the normal course of things. But I don't think it's the industry of rule. I've never been in a meeting where somebody said, well, let's do that. It's good for us, but it's bad for somebody else. No way.
Sachin Khajuria makes a good argument here that plenty of firms misbehave and fail and crumble without private equity investments. Brendan Ballou, the former Department of Justice lawyer and author of Plunder, is not particularly sympathetic to this argument.
There was a really interesting instance where a private equity firm bought up a restaurant chain, pushed it into bankruptcy, and ultimately was able to push off the pension obligations of the employees and retirees onto a quasi-government agency. And when asked about this tactic, the co-founder of…
You write that roughly one in five large companies acquired through leveraged buyouts go bankrupt in a decade. This is vastly more than the roughly 2% of comparable companies not acquired by private equity firms that do. Can you explain why that happens so often?
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