> But it's also the case that PE also tends to come in when a company is already troubled in some manner.
The problem is that PE also has a nasty habit of coming into a business that is marginally profitable but not spectacularly so, saddling it with giant amount of debt to vacuum up the cash flow, and killing the business.
There is nothing wrong with a sustainably profitable business. Investors, however, want returns from the lottery ticket that they fund.
Yup. They'll borrow huge sums on the credit and good basis of the company, and then "charge it" all to themselves as "management fees", vacuum it dry, and dump the company.
If you are a large business, you likely have multiple lines of credit already establish, potentially into the hundreds of millions or more range. Those are backed by the organizations credit and assets, and aren't likely to be yanked just because the organization has a new owner.
The problem is that PE also has a nasty habit of coming into a business that is marginally profitable but not spectacularly so, saddling it with giant amount of debt to vacuum up the cash flow, and killing the business.
There is nothing wrong with a sustainably profitable business. Investors, however, want returns from the lottery ticket that they fund.