On this special episode of the Craft Industry Alliance podcast, we’re talking about private equity with my guest Megan Greenwell.
Megan is a journalist who has written or edited for publications including The New York Times, The Washington Post, New York Magazine, WIRED, and ESPN. She is also the deputy director of the Princeton Summer Journalism Program, a workshop and college access initiative for students from low-income backgrounds. A California native, she lives in Brooklyn with her husband and their pug. Her new book is Bad Company: Private Equity and the Death of the American Dream.
We begin this conversation with Megan discussing the impact of private equity on her own life, drawing from her experience with working at a company that was acquired by a private equity firm and then her subsequent research into private equity’s practices.
We explore how private equity firms often prioritize short-term profits over long-term business health, using debt financing to acquire companies while extracting management fees and selling off assets. Through specific examples like Joann and Toys R Us, Megan explains how private equity acquisitions can lead to financial distress and bankruptcy, ultimately harming not just the companies and their workers but entire communities, as detailed in her book, Bad Company.
If you want the real story behind the ultimate fate of Joann, this is the episode for you!
To see our accompanying article, with a graph, about the history and downfall of Joann, please go here.
Really interesting episode. We’re facing similar challenges here in the UK. Hobbycraft (our largest craft chain) and The Factory Shop were acquired by Modella Capital, with store closures now underway under a CVA. Paperchase and No Ordinary Designer Label were acquired by a private equity group led by Steve Curtis (now Modella’s chairman), ended up in administration. Most recently, Crafter’s Companion was acquired by Modella (again) via a pre-pack, still early days there.
Worrying signs overall, but the craft industry seems to be going through some tough transitions across the board
This is such an important conversation. In our quest for “cheaper” stuff we are ruining what we love.
A HUGE number of companies have been purchased by private equity. HandiQuilter, JoAnn, Missouri Star, LoveCraft, Robert Hoffman, AccuQuilt, Jimmy Bean’s Wool,
Superior Thread, Berroco.
I’ve just named some that I personally know because they are my vendors.
I see all my favorite craft companies swallowed up by private equity. Sometimes they are run well after being purchased. But often they are run into the ground. The owners no longer cares. My most obvious example is Superior Thread. It used to be an excellent company. My opinion of it now is very low.
Hi Renea,
Thank you so much for your comment. I’m glad you found this conversation with Megan to be helpful. I just wanted to clarify that Handi Quilter was bought back and is no longer owned by Blue Point Capital. Missouri Star is also not owned by a private equity firm, and neither is Robert Kaufman. Thank you.
Thank you Abby, Is there a way to edit what I wrote? I certainly don’t want to say things that are incorrect. In this quick changing world it is hard to keep it all straight.
I read the following online. It might be incorrect or perhaps I misunderstand what a holding company is vs. private equity. I just understood that ownership has changed.
“Missouri Star Quilt Company is owned by a holding company called Creative Fiber Holdings and run by its CEO, Jeff Martin.” I actually understood that Robert Kaufman was purchased by Missouri Star. I think they have purchased lots of other companies as well. Nancy’s Notions maybe. Again, it is very hard to keep all the names of who bought who straight. Sometimes the collaboration is good. But what I have noticed is that once the creative person who started the company is gone, it often isn’t as good.
I love buying things from the creative little guy. It makes me sad when the creative is swallowed up or worse, destroyed by the big guy.