PE firms raise money from institutional investors and high net worth individuals to buy companies, restructure them, and sell them later for a profit. They’re all about maximizing returns ASAP, usually in a 3-7 year window. That’s a shorter timeframe than the typical founder or public company shareholder, and far shorter than Matt’s time horizon:

I would like future generations to grow up with a web that is more open, more free, gives more liberty, and so open source is really my life’s work, even above WordPress and anything else. I hope to work on it the rest of my life.

When a PE firm acquires a tech company, a few things happen. The new owners focus on aggressive cost-cutting and “streamlining” operations to boost short-term profitability. This is extremely destructive, leading to mass layoffs, reduced benefits, and wholesale outsourcing. At the same time, PE firms often load up acquired companies with debt, extracting cash while leaving the businesses more financially unstable. With a myopic focus on an exit, long-term investments in innovation, customer service, and employee development fall by the wayside.

The result? Private equity backed companies are 10 times more likely to go bankrupt than public companies.

The basic business model of private equity firms often leads to disasters like that at ManorCare for three fundamental reasons. First, private equity firms typically buy businesses only for the short term. Second, they often load up the companies they buy with debt and extract onerous fees. And third, they insulate themselves from the consequences, both legal and financial, of their actions. This leads to a practice of extraction, rather than investment, of destruction, rather than creation. While not every company owned by private equity firms goes bankrupt, the chance of disaster meaningfully increases under their ownership.
— Plunder by Brendan Ballou

Open source communities are particularly vulnerable to this model. They’re delicate ecosystems of volunteer contributors, transparent governance, and values-aligned sponsorships. Applying the PE playbook can easily destabilize that entire balance.

Take, for example, Vista Equity Partners’ $1 billion acquisition of Acquia in 2019. Acquia is the main commercial backer of Drupal, another popular open source CMS. In the years since the acquisition, the Drupal community has visibly struggled. Acquia appears to be contributing less code and providing less financial support to the ecosystem.

Just a few days ago, Acquia quietly laid off almost a third of its staff.

With fewer resources, core development and maintenance have slowed. This coincides with a sharp decline in Drupal’s market share compared to competitors like WordPress:

The Drupal story demonstrates how applying PE tactics to open source projects can undermine their health and sustainability. By nature, these communities aren’t a fit for rapid extraction of outsized returns. Their vitality depends on reinvestment, transparency, and long-term stability — the opposite of the PE model.

Toys “R” Us. Simon & Schuster. Even America’s ports. Not everyone can push back against private equity, but I believe we should support companies like WordPress that have a long history of admirable values and prescient leadership. WordPress powers more than 40% of the web — its community’s health is too important to ignore.