But it can make internal investment impossible and make the entire company act in cost-cutting mode, which isn't necessarily helpful to maximize profit. Eventually, the profitable business would stop being profitable.
"either way it would be coming out of the cash owned by the PE shops". They don't have to invest you know. After all, the company is now unprofitable. Obviously it's just inefficient. Why give money to an inefficient company from your core profitable business, when you can break the company up and use the profit from looting it in your core profitable business which you're good at?
It makes much more sense for PE finance to siphon funds for use in a field they have expertise in (more finance) than try to manage companies in various fields (like retail) they're so not expert on, especially when the companies are in the debt.