Kraft Heinz cut expenses too deeply under private equity management, its new CEO says

[Farmer-Rick]

48. And how does the current system help anyone?

Your argument assumes PE (Private Equity) only buys struggling companies, which is a wrong assumption. They frequently buy up perfectly performing companies and lead them to bankruptcy or break them up and sell off the pieces.

PE firms do not provide capital to struggling companies. They add the debt they used to purchase the companies onto the struggling company.

If a company is not performing and will eventually go into bankruptcy anyway, how does a PE help? They burden the company with the debt they used to buy up the company which almost guarantees a bankruptcy. And then the filthy-rich who fund the PE, get the wealth accumulated in the company, instead of it going to pensions, original debt holders and unpaid suppliers. If allowed to go into bankruptcy directly, the assets and wealth that the PE is eating up would be going to the rightful debtors instead into the hands of some greedy trust fund baby.