&gt;Most people who run a company will not behave like this.<p>No, but companies that are taken over by PE firms are fairly special.<p>In any case, since the fund is forced to sell the company after a few years, they&#x27;re still interested in LT value maximization.<p>Also, high debt levels aren&#x27;t just a way of taking back some of the money the fund put in. Debt helps to fix the companies. The PE business model essentially focuses on fixing principal-agent issues (i.e. management working against the best interests of shareholders). Improved governance, high equity ownership by management, and high debt loads are how they do it. &quot;Debt disciplines management&quot; because it forces them to eliminate -NPV projects and increase cash flows.