Private Equity Firms Must Be Prepared For Increased Congressional Scrutiny

Highlights

• Private equity firms may face oversight from a wide range of congressional committees, with affordability, healthcare, housing, public safety and market consolidation expected to remain key areas of focus heading into the 120th U.S. Congress.
• Congressional scrutiny of private equity is likely to intensify as lawmakers focus on the industry's growing presence in fragmented sectors or those with significant public interest, including healthcare specializations, housing and homebuilding, consumer and residential services, defense, emergency services and youth sports.
• Firms with potential congressional exposure should assess likely areas of inquiry, strengthen internal processes and coordinate legal, government affairs and communications strategies in preparation for potential investigations.

Congressional oversight activity relating to private equity investment is likely to intensify throughout the remainder of the 119th U.S. Congress and could expand significantly if Democrats regain control of either chamber following the 2026 midterm elections. Democratic control would bring not only greater focus on private-sector oversight, but also committee chairs with subpoena authority and the ability to compel documents and testimony.

Even when facing turbulent or challenging environments, private equity has remained steady in its commitment to invest in local economies and a wide-ranging profile of American businesses. The economic activity of the U.S. private equity sector alone generated $2 trillion of gross domestic product (GDP) in 2024, which supported 7 percent of the U.S. GDP.¹ That same year, it employed 13.3 million workers earning $1.1 trillion in wages and benefits.² Private equity firms continue to serve as a crucial partner for companies of all sizes across the country. In 2024, private equity backed approximately 21,000 companies, and of those, "approximately 85% were businesses with fewer than 500 employees."³ At the same time, by mid-October of last year, "private equity … had already deployed a record $17.7 billion into defense-related deals."⁴

However, despite these record numbers, the American private equity sector has also become an increasingly prominent target of populist criticism from both sides of the political spectrum. Recent polling data shows that voters across the political spectrum are overwhelmingly likely to agree with the need "for guardrails for Wall Street firms like private equity to prevent short term profit maximization that cuts jobs and reduces the quality of goods and services."⁵ The polling further found that a majority of voters across party lines were concerned with the trend that firms were taking over critical public service sectors, including healthcare and veterinary care (83 percent), housing (81 percent) and childcare (67 percent).⁶

What Does This Mean for Private Equity?

As voters continue to express a growing sense of anxiety on matters related to the economy, affordability and the quality of goods and services, members of Congress will be incentivized to respond to those concerns, and it is clear that congressional committees are preparing to do so. The Congressional Research Service (CRS) – the nonpartisan research arm of Congress – released a short report earlier this year examining issues associated with private equity firms' increasing presence in industries with a significant public interest focus. The report highlights private acquisitions in "public interest-oriented industries" as areas that have sparked congressional interest. Although not comprehensive, the CRS report provides Congress with a useful oversight road map that may inform future committee activity.

Historically, Congress has given leeway to emerging industries to develop prior to engaging in substantial legislative reform or oversight. With private equity becoming such a critical player in the economy – and one that has expanded into a wide range of sectors – it is unsurprising that Congress is now paying attention. The industry's diverse investment interests in areas such as emergency services, healthcare and veterinary services, housing, defense and youth sports have not gone unnoticed by Congress.

• Healthcare: When it comes to conducting oversight of private equity practices, healthcare has been the traditional focus of Congress. For example, in 2025 the U.S. Senate Budget Committee released a 171-page bipartisan report titled "Profits Over Patients: The Harmful Effects of Private Equity on the U.S. Health Care System." In 2024, Democrats on the bicameral Joint Economic Committee released a brief titled, "Predatory Private Equity Practices Threaten Americans' Health and the Economy" and in 2019, the U.S. House of Representatives Committee on Energy and Commerce led a bipartisan investigation into private equity practices surrounding surprise medical billing. Consolidations of independent veterinary practices have also been subject to congressional scrutiny. For example, Sens. Elizabeth Warren (D-Mass.) and Richard Blumenthal (D-Conn.) conducted an investigation in 2024 on corporate consolidation of pet care and its impact on services and workers.
• Housing: In an election year, housing affordability is a popular topic for congressional activity. During the 117th Congress, the House Financial Services Committee surveyed the five largest single-family rental companies and held an oversight hearing called, "Where have all the Houses Gone? Private Equity, Single Family Rentals, and America's Neighborhoods." Earlier this spring, the Senate Banking Committee ranking member launched an investigation into corporate ownership of single-family homes, multifamily homes and manufactured housing communities. Last month, Sen. Raphael Warnock (D-Ga.) spearheaded the inclusion of a provision to limit institutional investors owning single-family homes in the bipartisan 21st Century ROAD to Housing Act. This provision in the affordable housing package "bans corporations that own more than 350 single-family homes from purchasing [more] … and imposes a fine of the greater of either $1 million or three times the purchase price on any corporate investor that purchases a single-family home above the cap."⁷
• Defense: Another area of congressional concern is private equity investment in America's defense industry. Recent reporting on the Pentagon's plan for a 30-person team "to invest $200 billion over three years in defense deals" and provide "unmatched access to top-level government officials and privileged information flow" has earned the attention of members in the House and Senate. Sens. Warren and Blumenthal, along with Rep. Ro Khanna (D-Calif.) recently sent a letter to the Pentagon inquiring about its growing reliance on private equity investments and the related national security, conflict of interest and competition questions such investments raise. The trio also introduced a bill mandating the U.S. Department of War review transactions that would result in a private equity firm having a 25 percent stake or direct/indirect control of a defense contractor.⁸
• Emergency Services: Multiple lawmakers have begun a bipartisan oversight push into private equity's practices related to and buyouts of the makers of firefighting equipment. Sens. Jim Banks (R-Ind.) and Warren last year launched a bipartisan investigation into how private equity consolidation of fire truck manufacturers adversely impacted fire fighters and public safety. Last month, they also called on the Federal Trade Commission to investigate consolidation, shortages and price hikes for pumper and ladder trucks. A similar effort is being led by Reps. Derek Tran (D-Calif.) and Robert Garcia (D-Calif.). Last year, the U.S. Senate Committee on Homeland Security and Governmental Affairs held a subcommittee hearing titled, "Sounding the Alarm: America's Fire Apparatus Crisis," where members criticized market consolidation of the industry and its reported impact on firetruck prices and delivery times.
• Youth Sports: In the span of a few months, bipartisan scrutiny of the perceived impact of private equity investment on youth sports programs has grown, with members even expressing personal frustration with the practice.⁹ On June 30, 2026, the House Committee on Education and Workforce held a subcommittee hearing titled, "Field of Fees: Private Equity's Role in the Commercialization of American Youth Sports." Sen. Chris Murphy (D-Conn.) and Rep. Chris Deluzio (D-Pa.) introduced the Let Kids Play Act earlier this year to ban private equity investors from youth sports and hold them personally and financially responsible for any debts, legal judgments, or violations of the law while they are in charge.

What to Expect in the 120th Congress

Despite private equity's substantial contributions to state and local economies, it is unlikely that members of Congress will ignore the industry in the current political climate. Moreover, because private equity investment wisely spans such a wide range of industries, firms may face scrutiny from numerous congressional committees, depending on the sector and issues involved. Firms, therefore, should be prepared for significant oversight from across Congress, particularly as members respond to constituent demands coming out of the 2026 election and begin looking to 2028.

Congressional Democrats in particular are seeking to refocus their oversight away from the executive branch and toward the private sector. Firms, however, should not assume that scrutiny of private equity depends on Democratic control or that it will be limited to matters involving the current administration. Traditionally bipartisan committees may also face immense political pressure to investigate "kitchen table" issues involving affordability, healthcare, housing, public safety and other fragmented industries where private equity has an increasingly visible presence or plans to in the coming years.

For example, as Congress prepares to grapple with the rising cost of homebuilding and construction materials caused by the recent tariffs,¹⁰ private firms that are planning to or have invested in HVAC, plumbing, electrical contracting, landscaping, pest control, garage door, roofing and other consumer and residential services may attract congressional scrutiny. The same can be said of firms looking to invest in or consolidate auto services and industrial distribution businesses. Investment or roll-ups of more healthcare specializations – such as hospice or elder care, cardiology or orthopedic practices – or funeral or deathcare services should expect additional oversight, as healthcare remains an issue for voters and many struggle with the costs of caring for an aging population. Firms should also prepare for oversight of the impact of market consolidation as it relates to public safety. For example, recent consolidation and private investment in short-line railroads, class one carriers, terminals, rail car leasing and rail car repair may lead to new congressional scrutiny.

Firms should anticipate congressional oversight to unfold alongside state attorney general investigations, state regulators and private litigation. This will encompass not just investigations of private equity investment in targeted industries, but also broader antitrust enforcement efforts.

How Should Firms Prepare?

Congressional investigations are unlike other forms of government scrutiny because they require firms to navigate legal, political and reputational risk simultaneously, often with consequences for both the firm and high-profile individuals. For private equity, the question increasingly is not whether Congress will investigate private equity firms and their practices, but rather where the scrutiny will turn to next.

With the midterm elections rapidly approaching, Democrats in both chambers have already begun laying the groundwork for potential investigations through document retention requests, engagement with watchdog groups and coordination with the press. Rather than waiting until the new Congress is sworn in on January 3, 2027, firms with potential congressional exposure can use this period to assess risk, identify likely areas of inquiry, strengthen internal processes and develop coordinated response plans across legal, government affairs and communications functions.

Footnotes

1 Am. Inv. Council, Econ. Contribution of the Us Private Equity Sector In 2024 (March 2025) at 5.

2 Id.

3 Id. at 10. See also Am. Inv. Council, Private Equity Powers Small & Mid-Market Businesses (August 2025).

4 Maya Rodriquez Valladares, Is the Pentagon for Sale to Private Equity, Forbes (May 30, 2026).

5 Lake Research Partners, "New Bipartisan Polling Shows Support for Private Equity Regulation" (July 30, 2026) at 2.

6 Id. at 3.

7 Press Release, Sen. Warnock, Warnock-Led Private Equity Housing Ban Clears Congress, Heads to President's Desk in Landmark Housing Package (June 23, 2026).

8 See Critical Defense Ownership Review Act of 2026, S. 4734, 119th Cong. (2026).

9 See e.g., Sen. Chris Murphy, My Son's Hockey Team and the Crises of American Resentment, The Atlantic (May 20, 2026).

10 See e.g., Homebuilding Materials Tariff Relief Act, H.R. 9977, 119th Cong. (2026).