A version of this article first ran in Craft Industry Insider, our monthly newsletter for corporations and larger businesses in the crafts industry.

Through most of the 20th century, almost all major U.S. corporations were public, meaning their shares were listed on the stock market and their financial reports openly accessible.

A vibe shift happened around 1970, inspired by Milton Friedman, who wrote: “The social responsibility of business is to increase its profits.” Social responsibilities — to workers, the community, the environment — are irrelevant. And if driving a company out of business will make more money, liquidation is the only logical option.

This shift set the scene for private equity’s rise, influencing economic policy and business for decades to come.

Megan Greenwell explores the effects of private equity in her new book, “Bad Company: Private Equity and the Death of the American Dream.” She follows four people directly impacted by these profit-seeking strategies: a retail worker for Toys R Us, a doctor working at a rural hospital, a local news journalist and an affordable housing advocate.

While she’s not a crafter herself, in following Joann’s bankruptcy, she learned “crafters are not a group of people you want to piss off,” Greenwell says. It’s common that “you don’t think about private equity until it enters whatever your niche is. It was a little heartening to see a new group of people get radicalized.”

The growth of private equity

Some smaller companies in the 1960s and 1970s took on “bootstrap deals” or “leveraged buyouts,” akin to house flipping for companies too small to go public. In the 1980s the number and size of leveraged buyouts grew, to the point where today private equity firms control $8.2 trillion in assets. If private equity was its own country, it would rank No. 3 in economic power after the U.S. and China.

These buyouts are funded by debt in the name of the acquired company, not the private equity firm. “If the acquired company runs into financial trouble, its owners need not bail it out,” Greenwell writes. “The company and its employees shoulder the risk.”

The fact that private equity firms don’t have to disclose much about their holdings or fiscal health means that workers have less insight into how their employer is doing and what the long-term strategy is. An estimated 13.3 million Americans work at private-equity-owned companies, 7.8% of the total U.S. workforce.

Financial success at the portfolio company sometimes is not even the goal. It is actually very hard for private equity to lose money. Private equity firms earn management fees, transaction fees and monitoring fees that typical companies do not, and they benefit from tax breaks that allow them to keep more of their profits than other kinds of businesses do.

“We think of capitalism as the thing you own has to make money for you to make money,” Greenwell says. “And that is not how it works at all in private equity. In many cases it’ll be more lucrative to shut a company down than to do the hard, slow work of strengthening the company.”

The goal of private equity — as described by executives — is to improve companies to prepare them for a profitable exit. That can mean going public, being sold off or being liquidated.

Research has shown that 20% of private-equity-owned firms go bankrupt within 10 years, compared to 2% of all other types of businesses. The Private Equity Stakeholder Project found that private equity firms played a role in 56% of the large bankruptcies of 2024. That includes Joann.

Private equity in the craft world

Consolidation has been playing out in the creative industries for decades. And as those craft conglomerates have grown, they’ve attracted increasing attention from private equity.

Michaels Stores, founded in 1973, was first publicly traded in 1984. In 2006, private equity firms Bain Capital and Blackstone purchased Michaels for $6 billion, taking it private. In June 2014, Michaels became a public company again at a market value of about $3.5 billion. Michaels took a $3.3 billion buyout from Apollo Global Management in April 2021 that valued the company at $5 billion and once again made the company private.

Joann went public as Fabri-Centers of America in 1969. It remained on the NYSE for more than 40 years until it accepted a buyout offer of $1.6 billion from private equity firm Leonard Green & Partners in March 2011. In March 2021, Joann again went public, with Leonard Green holding a majority stake in the company. Despite booming sales during the pandemic, Joann filed for Chapter 11 bankruptcy protection in March 2024. The company filed for bankruptcy again in January 2025, with $615.7 million in debt, after using its 2024 reorganization to eliminate $505 million in debt from more than $1 billion owed. Leonard Green exited without being responsible to creditors.

In many cases, a private equity bailout saddles the acquired company with debt. Repeated entrances and exits from the public market are strategies for raising funds. “Going public is not necessarily a sign of financial health,” Greenwell says.

With Joann, “It’s really hard to imagine, with more than $1 billion in debt, how this wasn’t going to be the outcome,” Greenwell says. “Retail is a competitive environment, and that’s exactly why you need liquid capital to be able to innovate and improve the in-store experience.”

In fact, in the past few years most private equity firms have made a hard turn away from retail. KKR and Bain, which owned Toys R Us, have exited retail entirely. “Private equity says it’s impossible to make a good business out of retail anymore, but there are so many counterexamples,” Greenwell says, pointing to the fact that nine out of 10 of the biggest retailers in America are publicly owned.

Private equity loves to target small family-owned companies, which they roll into larger companies by additional acquisitions. Comvest Partners, which holds $16.4 billion in assets, has owned major yarn player Spinrite since 2018, and acquired Coats’ North American business in 2019.

Blue Point Capital Partners, a smaller private equity firm based in Cleveland, has been buying up companies in the craft world since 2014. The umbrella Local Crafts Group (formerly Premier Needle Arts) expanded with acquisitions of Superior Threads in 2016, Quilt Pro Systems in 2016, Crafts Americana Group in 2017, Berroco in 2021, and Jimmy Beans Wool in 2025.

Blue Point Partner Sean Ward said on a podcast last month: “We fully expect to bring other brands into the fold. Our real goal is to continue to find those brands/creators that are looking to continue growing their business.”

Listen to our podcast interview with Megan Greenwell, author of Bad Company: Private Equity and the Death of the American Dream, in which we trace the downfall of Joann right here.

Grace Dobush

Corporate News Reporter