Like with VC investing, lenders don't always need every pitch to end up a home run. In the case of business lending something like 90+% of loans get paid off. F

Like with VC investing, lenders don't always need every pitch to end up a home run. In the case of business lending something like 90+% of loans get paid off. For PE-owned businesses, just over half get paid off, which justifies the risk on the half that don't, but since this risk is far greater than with normal loans the interest rate is higher for PE-owned businesses. It's just basic finance. It doesn't require caricatures, just a knowledge of how this stuff works. Lenders are also not all banks, and in the case of PE-owned businesses, most lenders are not banks (but would be characterized as financial institutions), because most banks simply won't lend to PE-owned businesses, having been burned in the past. For some PE firms, business flow is highly dependent on finding new lenders to finance their debt-financed purchases because their old lenders won't lend to them anymore. PE firms aren't the caricatures that HN thinks they are. They're worse. You want to know why small town America can't afford to go to their small town doctor or dentist or veterinarian anymore? (Hint: the PE firms bought most of the small practices.) Want to know why it costs 10x as much to send grandma to the retirement home or hopsice? (Hint: PE firms bought nearly all of the retirement homes and hospices.) Want to know why insurance keeps rising by double-digits every year despite a corresponding lack of insurance payouts? (Hint: PE firms either own or are now major investors in most insurance companies). Want to know why dozens of major PE-owned retailers survived COVID but then died despite being cash-flow positive on an EBITDA basis? (Hint: the "I" in EBITDA from the PE debt financing overwhelmed everything else.)