The risks of a private equity takeover of Walgreens
March 7, 2025
Walgreens buyer Sycamore Partners has a history of bankruptcies and workplace violations
Yesterday, news broke of the acquisition of national pharmacy company Walgreens by private equity firm Sycamore Partners.
The nonprofit watchdog Private Equity Stakeholder Project (PESP) released the following statement on the private equity takeover of Walgreens:
“We are very wary of Sycamore Partners purchasing Walgreens. The private equity business model could spell trouble for this large pharmacy chain. Many communities rely on Walgreens for access to necessary prescription drugs, and the company employs hundreds of thousands of people.
“Private equity has invested over $1 trillion in the U.S. healthcare sector over the last decade, and touches virtually every corner of the industry. This is despite the fact that private equity investment in healthcare companies carries substantial risk to patients, workers, and investors.
“The typical private equity investment playbook may lead to behavior that jeopardizes patient care and increases bankruptcy risk. In fact, we found that private equity firms were behind 7 of the 8 largest healthcare bankruptcies last year. When looking at all sectors, private equity firms played a role in 56% of large U.S. corporate bankruptcies during 2024.
“Sycamore Partners, in particular, has demonstrated problems at the portfolio companies it has owned. Under Sycamore Partners’ ownership, multiple companies, including Belk and Nine West, have filed for bankruptcy. In addition, Sycamore Partners-owned companies have been fined for a number of health and safety, wage and hour, and environmental violations.”
On the 2023 PESP Private Equity Labor Scorecard, Sycamore Partners received a failing grade of 51.73%. Sycamore Partners portfolio companies are responsible for many reported, serious OSHA violations—those in which workplace hazards could cause serious physical harm or death. Staples has had 32 OSHA violations totaling $85,402 in fines since it was acquired by Sycamore Partners—23 of these violations are considered serious. All Sycamore Partners portfolio companies measured are retail firms; none had a union presence.
The PESP Private Equity Bankruptcy Tracker shows that private equity played a disproportionately large role in large U.S. bankruptcies in 2024: 56% of large corporate bankruptcies (those with liabilities exceeding $500 million) had a history of private equity ownership. Private equity bankruptcies in 2024 resulted in at least 65,850 layoffs across the country. Specifically in healthcare, the percentage of private equity bankruptcies did not decrease between 2023 and 2024, despite reporting that all healthcare bankruptcies were down in 2024.
In 2023, 21% of healthcare bankruptcies involved private equity-owned companies. This number stayed the same in 2024, with 21% of healthcare bankruptcies being private equity backed. More importantly, however, was that 7 out of 8 (88%) of the largest (liabilities over $500 million) bankruptcies in the healthcare industry in 2024 had a history of private equity ownership.
