There's a great CNBC show called "The Profit" which really makes it easy for a layman to understand how private equity works. On the show, it's interesting to s

There's a great CNBC show called "The Profit" which really makes it easy for a layman to understand how private equity works. On the show, it's interesting to see how the investor who is putting up his money is often uninterested in investing in a company that's growing quickly and making good profit margins. I can only speculate on what the investor's true motivations is. But there was one episode in particular which was interesting: 1) The investor came in, offered up a few hundred thousand dollars for a 51% stake 2) He immediately had the company upgrade their equipment, purchasing new equipment 3) Eighteen months later, the company was bankrupt When all the dust settled, the company was re-packaged and sold to another company, the original owners were gone, and the manufacturing was sent overseas. When the investor was having them buy a bunch of equipment, I was definitely wonder if his prime motivation was to simply have some tangible assets that he could recover once the inevitable bankruptcy occurred.