Case study: Private equity impacts in Michigan
May 28, 2025
Private equity firms have become increasingly powerful players in Michigan’s economy, with nearly 9% of the state’s private sector workforce at private equity-controlled companies.[1] Backed by billions from institutional investors, including pension funds like the State of Michigan Investment Board, these firms buy up companies across healthcare, manufacturing, hospitality, and retail. Companies owned by private equity firms have been associated with patterns of labor disputes, layoffs, service reductions, and bankruptcy. In several instances, these firms receive capital from Michigan’s public pension funds, linking the pensions of public sector workers to corporate practices that may negatively impact Michigan residents and workers.
One of the most illustrative examples is Apollo Global Management’s ownership of LifePoint Health, which has operated Bell Hospital in Michigan’s Upper Peninsula since 2013. The Michigan Retirement System holds investments in Apollo Investment Fund IX, which controls LifePoint.[2][3][4] After bargaining for over a year, he nurses at Bell Hospital ratified their first contract in the summer of 2024.[5][6]
Many of the hospital systems Apollo owns are highly indebted, have cut operating costs and charity care, and in some cases reduced services, received poor quality rankings, and attracted regulatory scrutiny.[7] According to The Lown Institute Hospital Index, which ranks hospitals and health systems based on health equity, value, and outcomes, several Lifepoint facilities rank among the worst hospitals in their states. There are four Apollo-backed hospitals in Michigan and nine total private equity-backed hospitals in the state.[8]
See PESP’s Hospital Tracker Here
In addition to direct ownership of hospital systems, private equity’s influence in healthcare is growing through joint ventures and outsourcing arrangements. As of late 2021, Ascension, a non-profit Catholic health system with operations in Michigan, was partnered with TowerBrook Capital Partners and contracted staffing functions to SCP Health, a private equity-owned provider.[9] While such arrangements may offer short-term cost-cutting, they have also been linked to inconsistencies in standards of care, increased medical errors, and reduced patient and employee satisfaction, according to a November 2021 report by the Mayo Clinic—issues that merit closer scrutiny when they involve essential public health infrastructure.[10]
Private equity’s impacts extend beyond healthcare. GFL Environmental, a waste management provider backed by BC Partners, has faced labor unrest in Michigan.[11][12] GFL is pushing back against workers unionizing with the Operating Engineers. In Wayne, Michigan, the National Labor Relations Board’s General Counsel issued a complaint against the company, alleging that it committed multiple unfair labor practices, including the withholding of wages, discharging employees, and the refusal to negotiate in good faith.[13]
Hearthside Food Solutions, a manufacturer that supplies baked foods, snacks, nutrition bars, and food packaging services to customers in the food and snack industry, operates more than two dozen facilities across the United States, including key plants in Grand Rapids and Kentwood, Michigan.[14] With a workforce of over 12,000 employees, the company plays a significant role in local economies and national food supply chains. Hearthside is owned by private equity firms Charlesbank Capital Partners and Partners Group. Notably, the Michigan Retirement System has invested in Charlesbank Capital Partners.[15]
In 2023, Hearthside came under intense scrutiny following a federal investigation by the U.S. Department of Labor (DOL) into alleged violations of federal child labor laws.[16] These allegations were first brought to light through an investigative report by The New York Times, which claimed that underage workers were employed in hazardous conditions, producing name-brand products such as Chewy granola bars, Lucky Charms, and Cheetos. Although Hearthside denied knowingly employing underage labor and reached a settlement with the state of Illinois regarding the Department of Labor investigation[17], the revelations prompted significant public concern and raised broader questions about labor oversight within private equity-owned firms.[18]
The implications of this investigation extend beyond the immediate legal and ethical violations. The private equity ownership model may incentivize labor cost reductions and outsourcing at the expense of compliance and worker welfare. The intense focus on short-term profitability and lean operational structures can create conditions with reduced accountability and minimal oversight.
In November 2024, amid these labor controversies and ongoing financial challenges, Hearthside filed for Chapter 11 bankruptcy. The company cited macroeconomic pressures and supply chain disruptions as contributing factors.[19] In March 2025, after the closure of a California facility, Hearthside announced that it had completed its financial reorganization under the new name, Makers Pride.[20][21] While the absence of plant closures in Michigan may have mitigated some of the local impact, the company’s financial instability underscores broader concerns about the sustainability of the private equity model in essential manufacturing sectors.
Hearthside is not a stand-alone case of private-equity backed bankruptcy. In 2024, private equity-owned companies made up 50% of large bankruptcies, which threaten the livelihoods of workers, patients, and consumers.[22] The private equity model’s focus on short-term gains and rapid value extraction can come at the expense of long-term sustainability. In 2024, private equity-backed companies comprised 54% of large bankruptcies (those with over $1 billion in liabilities).
2024 Private Equity Bankruptcy Tracker
Joann, the fabric and craft store, filed for bankruptcy and announced that it would close and liquidate in January 2025.[23] The hobby store closed 41 locations in Michigan, laying off nearly 1000 workers in the state.[24][25] The company was owned by Leonard Green and Partners, a private equity firm with a history of aggressive debt practices that have led to the failure of a number of its portfolio companies.[26]
International Automotive Components Group (IAC Group), a global supplier of automotive interior systems, followed a similar trajectory under private equity ownership. Backed by Gamut Capital Management, IAC Group filed for Chapter 11 bankruptcy in June 2024, citing industry-wide disruptions and an unsustainable debt burden.[27][28] The company operates facilities in Alma and Mendon, Michigan, communities with longstanding ties to the auto manufacturing sector.[29] This bankruptcy raises broader concerns about private equity’s influence on the automotive industry, especially in states like Michigan, where manufacturing is a critical economic pillar.
Bar Louie, a national restaurant chain acquired by Sun Capital Partners in 2010, announced in March 2025 that it would seek Chapter 11 bankruptcy protection.[30][31] Under Sun Capital’s ownership, Bar Louie took on significant debt.[32]As part of its restructuring plan, the company closed 13 locations nationwide, including two in Michigan.[33] These closures displaced dozens of workers and contributed to the pattern of retail and hospitality instability tied to aggressive private equity ownership strategies.[34]
The private equity tendency to focus on short-term gain rather than on longevity and growth can not only lead to bankruptcy but may indicate that long-term investments in private equity are not as lucrative as investors were promised. Between 2010 and 2020, public pension funds’ private equity investments performed worse than the S&P 500 in the same time frame.[35]
Private equity firms now control a significant share of Michigan’s private sector employment.[36] While these firms promise high returns, their strategies have been linked to labor disputes, service reductions, and financial instability in critical industries across the state. Given the growing influence of private equity, public pension funds have the opportunity and responsibility to set higher standards.
Investors can mitigate adverse impacts on Michigan workers, as well as financial risks, and reputational damage to their institutions by adopting specific labor standards across their private equity portfolios. The largest public pension fund in the United States, the $500 billion California Public Employees Retirement System (CalPERS), began implementing its policy to address subpar labor practices at some of its asset managers’ portfolio companies in early 2024. In April 2024, the New York State Common Retirement Fund adopted a Responsible Workforce Management Policy and Principles for its private equity investments. Investment policies offer limited partners an important tool to address the risks associated with private equity investments.
[1] PESP Risk Index https://privateequityrisk.org/state/michigan/
[2]https://marquette.org/bell-hospital-sold-to-lifepoint-hospitals/
[3]https://www.michigan.gov/mdhhs/-/media/Project/Websites/treasury/SMIB/2024/October-2024-SMIB-Report.pdf?rev=e27bc7cc7c77447d9ffab4ebea3e43c1
[4]https://www.beckershospitalreview.com/finance/pe-firm-made-1-6b-by-selling-lifepoint-to-fund-it-owns/
[5]https://www.nationalnursesunited.org/article/michigan-nurses-score-series-of-collective-bargaining-wins
[6]https://www.uppermichiganssource.com/2024/04/24/up-health-system-bell-negotiation-faces-milestones-challenges/
[7]https://pestakeholder.org/reports/apollos-stranglehold-on-hospitals-harms-patients-and-healthcare-workers/
[8]https://airtable.com/appZYwbt3vioNrb95/shricxhAQSjpv5ec8/tbl058jjL6qNMqzkM
[9] https://www.statnews.com/2021/11/16/ascension-running-wall-street-style-private-equity-fund/
[10] https://www.healthcaredive.com/news/ascension-outsource-private-equity-chicago/711372/
[11]https://gflenv.com/locations/michigan/
[12]https://www.pehub.com/bc-backed-gfl-announces-share-purchase-and-secondary-transactions/
[13]https://www.nlrb.gov/case/07-CA-332195
[14]https://wcrz.com/hearthside-food-solutions-files-bankruptcy/?utm_source=tsmclip&utm_medium=referral
[15]https://www.michigan.gov/mdhhs/-/media/Project/Websites/treasury/SMIB/2024/October-2024-SMIB-Report.pdf?rev=e27bc7cc7c77447d9ffab4ebea3e43c1
[16]https://www.reuters.com/business/us-crack-down-child-labor-amid-massive-uptick-2023-02-27/
[17] https://www.foodbusinessnews.net/articles/27384-hearthside-food-solutions-settles-state-child-labor-probe
[18]https://www.reuters.com/business/us-crack-down-child-labor-amid-massive-uptick-2023-02-27/
[19]https://www.reuters.com/business/retail-consumer/snack-maker-hearthside-files-bankruptcy-after-child-labor-probe-2024-11-22/
[20] https://www.businesswire.com/news/home/20250331335621/en/Hearthside-Completes-Financial-Restructuring-and-Unveils-New-Makers-Pride-Brand-Identity
[21]https://www.google.com/url?q=https://www.foodbusinessnews.net/articles/27947-hearthside-closing-california-plant%23:~:text%3D%25E2%2580%2593%2520Hearthside%2520Food%2520Solutions%252C%2520a%2520contract,the%2520California%2520Employment%2520Development%2520Department&sa=D&source=docs&ust=1745610368990130&usg=AOvVaw3ErLzS37U2FDn18X7x1m5E
[22]https://pestakeholder.org/news/private-equity-industry-behind-over-half-of-large-us-bankruptcies-in-2024/
[23]https://www.forbes.com/sites/pamdanziger/2025/02/26/major-retail-job-losses-at-party-city-joann-este-lauder-starbucks-walmart-kohls-and-more/, https://www.retaildive.com/news/joann-bankruptcy-chapter-11/737421/
[24] https://www.freep.com/story/news/local/michigan/2025/02/24/joann-craft-fabric-stores-going-out-of-business-michigan-bankruptcy/80051902007/
[25] Employees calculated using percentage 41/800 stores, 19,000 total employees (https://pestakeholder.org/news/joann-store-closures-among-many-leonard-green-and-partners-bankruptcies/).
[26]https://www.privitas.com/leonard-greens-twice-bankrupt-joann-a-cautionary-tale
[27]https://autotechinsight.ihsmarkit.com/news/5244560/iac-group-receives-strategic-investment-from-pe-firm-gamut-capital
[28] https://ackordscentralen.se/content/uploads/2024/07/to-affected-suppliers-of-iac-240627-w-appendix.pdf#:~:text=International%20Automotive%20Components%20Group%20Sweden%20AB%2C%20(the,Sweden%20on%2027%20June%202024%20and%20the
[29]https://www.themorningsun.com/2023/05/27/almas-iac-plant-gets-major-boost-from-state-funding/
[30]https://www.nrn.com/restaurant-finance/sun-capital-buys-bar-louie
[31] https://www.usatoday.com/story/money/2025/03/28/bar-louie-closing-restaurants-bankruptcy/82704838007/
[32]https://www.restaurantbusinessonline.com/financing/sun-capital-leaving-restaurant-business
[33] https://wcsx.com/2025/03/27/bar-louie-to-shutter-auburn-hills-livonia-locations-dozen-of-employees-laid-off/
[34] https://www.wxyz.com/news/bar-louie-closes-livonia-location-laying-off-dozens-of-employees
[35]Blasdel, Alex. “Slash and Burn: Is Private Equity Out of Control?” The Guardian. October 10, 2024. https://www.theguardian.com/business/2024/oct/10/slash-and-burn-is-private-equity-out-of-control.
