Gretchen Morgenson and Joshua Rosner
Review via Business Insider
According to the authors, private equity firms “buy companies and load them with debt while bleeding them of assets and profits,” only to, within a few years, “sell these same companies off to new owners … at a substantial gain.”
On its face, the idea that one could regularly flip unprofitable businesses drained of productive assets for spectacular gains just doesn’t make sense. Sure, you could find a few anecdotes in which an aggressive private equity firm successfully foisted an overleveraged company it had subjected to excessive cost-cutting onto an unsuspecting buyer. But is this credible as a strategy for deploying trillions of dollars of capital? No way.
