Private companies underwent a record number of bankruptcies last year.
Data from S&P Global Market Intelligence show that 110 U.S. companies backed by private equity and venture capital filed for bankruptcy in 2024, up more than 15 percent from the previous year — the highest annual total on record. By comparison, overall bankruptcies in the U.S — everything but companies owned by private equity and VC, reached 694, a year-over-year uptick of 9.3 percent.
Of the bankruptcy filings made by PE and VC-backed companies in 2024, more than half were in the consumer discretionary and healthcare sectors. Among the largest bankruptcy during the year was Blue Owl Credit Advisors-owned snack maker H-Food Holdings and Prospect Capital Management-backed healthcare provider Wellpath Holdings.
According to S&P Global Market Intelligence, post-pandemic shifts in spending and high inflation hurt consumer discretionary companies, while high operating costs have weighed down healthcare.
This data from S&P came out days after the Senate Budget Committee issued a report by Senators Chuck Grassley (R-Iowa) and Sheldon Whitehouse (D-RI) concluding that private equity-backed healthcare providers are prioritizing “profits over patients,” resulting in negative impacts on hospitals nationwide.
While focusing on two PE-owned healthcare companies, the 170-page Senate report highlights “significant concerns regarding the impact of PE ownership on the quality of care, patient safety, and financial stability at hospitals across the United States,” with “troubling patterns of prioritizing profits over patients and of unfulfilled promises.” (Studies show that private equity firms’ involvement in health care leads to higher costs and lower quality of care.)
While the report acknowledges that not all PE firms operate the same way, “the evidence highlights systemic issues with PE investment in health care, including underinvestment in hospital infrastructure, understaffing, and the pursuit of financial gains through leveraged buyouts and dividend extractions — often to the detriment of patients and hospital operations.”
Private equity deal terminations showed marked improvement in 2024, with cancelled PE-backed transactions in the U.S. dropping 57 percent to 12 deals from 28 in the previous year, according to S&P. The data indicates a more stable dealmaking environment, with PE-backed transactions representing 15.4 percent of the total 78 terminated deals across all sectors.
In terms of dollar volume, terminated private equity deals reached $14.11 billion in 2024, declining approximately 20 percent from $17.7 billion in 2023. This trend was mirrored in the broader M&A landscape, where the total value of cancelled deals fell more substantially to $43.34 billion from $99.1 billion year-over-year, representing a 56 percent decrease.
