Hacker News Reader

Why would it be profitable for the company they just paid a lot of money to acquire to implode?

they usually get the company to take out the debt to actually be acquired. it’s the key first step.

then they extract as much cash as possible while the debt ballons. so called ‘extracting brand value’.

the investors usually do quite well

They sell off everything of value before it implodes and cash out. THEN they let it implode with nothing but the debt remaining.

Why would banks lend to such an enterprise if they don't expect to get paid back?

They don't. They lend to the target company BEFORE the buyout.

So over time banks will learn to avoid lending to buyout targets?

banks generally lend using a set of relatively hard coded critera. it would take systemic change for them to ‘learn’.