r/explainlikeimfive Feb 14 '25

Economics ELI5: How do private equity firms bankrupt businesses?

219 Upvotes

93 comments sorted by

View all comments

-1

u/sanchezroman Feb 14 '25

Imagine taking out a HUGE loan to buy a house... but the house is a company, and you use the company's own money to pay for the loan, then can't pay the mortgage. Poof - bankruptcy!

2

u/batojutzu 16d ago

downvoted this. instead of being clearer, this made the concept more complicated. sometimes some people should just accept the limit of their intellectual capacity.