Imagine you have a lemonade stand, and you’re doing pretty well. A rich person comes along and says, I’ll buy your stand and make it even better!
But instead of using their own money, they borrow a LOT of money in your lemonade stand’s name. Now, your stand has to pay back that big debt.
Then, the rich person takes a bunch of the money your stand makes and gives it to themselves and their friends. But your stand still has to pay the debt, and soon, there’s no money left to buy lemons or cups.
Now your stand is out of business, and the rich person walks away with a big bag of money.
This is absolutely nonsense. If your lemonade stand (or other business) is doing "pretty well", you aren't going to sell it to a private equity firm. You will keep it yourself and make the money that you can keep. The only reason you would sell it to a private equity firm is if it's already on the edge of bankruptcy and this is your last ditch effort
162
u/Borntwopk Feb 14 '25 edited Feb 14 '25
Imagine you have a lemonade stand, and you’re doing pretty well. A rich person comes along and says, I’ll buy your stand and make it even better!
But instead of using their own money, they borrow a LOT of money in your lemonade stand’s name. Now, your stand has to pay back that big debt.
Then, the rich person takes a bunch of the money your stand makes and gives it to themselves and their friends. But your stand still has to pay the debt, and soon, there’s no money left to buy lemons or cups.
Now your stand is out of business, and the rich person walks away with a big bag of money.