[jtbayly]

Here’s the part I don’t understand. If they can’t exit, don’t they lose money in spite of the limited downside risk? For example, the Toys “R” Us example:

"$1.3 billion came from the buyers’ own pockets”

"PE consortium collected $470 million in fees and interest over the course of ownership”

So they lost $830M on the deal?

[mindslight]

Yes, this is exactly the question I always have with the PE narratives - what do the supply-side incentives of PE look like? Is this an overall profitable activity where the vultures and their debt-backers win out? Is it merely profitable for the PE firm but a whole bunch of debt-bagholders lose out? Are those losers corporate junk bond stuffed into retirements funds and whatnot, but the funds' managers are happy with their own fees, and customers don't really notice the slightly lower returns from a few "bad investments" (but are still ultimately being swindled) ?

The article touches on this a little in vague terms, citing some studies, which is more than I can say for most. If this is an economically destructive dynamic, and it most certainly feels like it is, then some type of investor must be losing out, right?? It seems worth it to focus on who those parties are to see if that source of energy can be cut off.