If only one could refuse to buy such debt

Private Equity Firm Acting Like A Private Equity Firm

Here’s how private equity works: A firm buys a company with a lot of borrowed money. The now-p.e.-owned company borrows even more money to repay the p.e. owners. The p.e. firm resells the now-heavily indebted company on to the next sucker. Repeat. In layman’s terms, this is called levering to the hilt. It’s how private equity firms make money: Using leverage to extract as much as they can for themselves and their investors. But it is not the only kind of leverage available to p.e. firms. No! They can lever their leverage, especially when interest rates are laughably low. Leverage, after all, is just debt, and debt is just a contract for money, and contracts have to be negotiated, and the negotiator with more of the other kind of leverage is able to impose more of the terms of the contract ...