I wonder if history will judge the PE business model as being illegitimate. For the moment, it sounds legal, (IANAL) but it also sounds like the corporate system was not meant to be run this way.<p>In short, what is generally done (and also in this case) is that when you buy a company, you can have the company borrow money, and transfer that money to the PE owner. You can do this because you have good bank connections, and the company is a large going concern that is used to borrowing some money from its lenders. I couldn&#x27;t just open a company tomorrow and fleece the bank by paying it all to myself.<p>Our corporate system grew out of the industrial revolution. There was a need to finance large undertakings in a way that wouldn&#x27;t be ruinous if it went wrong. Gathering a bunch of money from investors wasn&#x27;t a new idea (various &quot;Indian&quot; trading companies) but limited liability was seen as a necessity for risk taking. During the 1800s a bunch of western countries created the modern forms of the law (<a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Limited_liability" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Limited_liability</a>).<p>With the PE type model, you can take over a company, load it with debt, and transfer risk-free money to a parent fund. The company doesn&#x27;t necessarily go bankrupt, but it&#x27;s more likely if you take a lot of debt. If the company does well, great. You can take that account statement to your bank and... pile more debt on.<p>Most people who run a company will not behave like this. The idea is not to have a company that is constantly on the brink, but to pay out some dividends when it&#x27;s safe to do so.