A lot of times you hear about private equity (PE) firms "gutting a perfectly good company". With famous cases like Toys 'R' Us or Red Lobster. However, this narrative often misses a crucial point. From a purely investor point of view, these weren't "perfectly good" companies in the first place. The reality is when private equity utilizes their controversial tactics, like asset stripping, sale-leasebacks, hefty management fees, aggressive cost-cutting, and loading companies with debt, they are only able to do such actions, largely because their targets are, at their core, inefficiently run businesses with underutilized assets and sub-optimal returns on capital. What happens is these PE firms, will buy out the underlying company. Sell off their assets, like real estate and make the companies rent the properties instead. Then distribute the proceeds from the real estate sales. Then they pay themselves huge management fees for taking these "strategic" actions, and continue with aggressive...