Comment by skeeter2020

The PE playbook (assuming 5 year term):

1. buy asset-heavy companies with good cashflow and add to you portfolio. 2. aggressively cut costs on long-term investments like R&D, major capital projects, and squeeze OPEX 3. at the same time focus solely on S&M. If possible get everyone on multi-year contracts that last until year 6 (often with heavy discounting on the back end) 4. shed impressive dividends over the term 5. years 3-4 make signalling investments that hint towards hockey-stick growth: (real life) examples: 1. replatform your database from on-prem to AWS, 2. move OFF aws to fixed-provisioned (I'm not making this up) 6. shop for a new PE fund to sell. Look for a 3x or higher multiplier on initial investment 7. sell, repeat, parchute in your bench of executives.

Eventually you've got a bunch of companies that look like subprime-backed CDOs