Private equity is even more insidious than you can imagine.
How it works is that PE will buy a profitable company, and then strip out everything it can, and then load on the debt. In exchange for loading on the debt, the banks will give preferential treatment to the other companies in the PE fund's portfolio. <----- This is the part everyone misses.
In addition, they will force the company to purchase services and even entire companies from the PE company's fund portfolio. <----- This is the part everyone misses.
Then, after a year or so, PE will IPO the company and sell to retail suckers. Mutual fund companies will hold their nose and buy into the IPO even though everyone knows it's a shitty company. The reason why is because the PE company will give early access to investment in their other more promising companies. <---------- This is the part everyone misses.
So PE companies will make a lot of money by stripping every part of the company out, maximizing and leveraging its portfolio of other companies so that banks and mutual fund companies will dump money into them. It's literally like harvesting a farm animal and carving absolutely everything of value off of it, as well as leveraging other companies to dump into it with the promise of access to other companies in its portfolio.
And then they turn around and dump the carcass into the hands of retail suckers, either through their mutual funds like Fidelity or straight onto the markets.