Its not that the underlying firm cannot support the debt load, if the proceeds from that debt were put in to productive uses (expand production, design new prod

Its not that the underlying firm cannot support the debt load, if the proceeds from that debt were put in to productive uses (expand production, design new products, more marketing, etc). The problem is that the debt is taken on, then the firm pays huge special dividends or “management fees” to the PE firm. PE firm often recoups the initial investment within first year. Then the firm is forced to focus on short term gains to make the numbers look good so PE firm can find another sucker (either another PE firm or IPO).