The risk comes from financing, governance, and operating decisions
Overleverage, weak incentives, and rushed integration create identifiable risks.
“Private equity wrecks companies” is too broad to be useful. Companies are damaged by specific decisions: excessive leverage, unrealistic operating assumptions, deferred investment, weak governance, poorly designed incentives, or integration that moves faster than the organization can absorb.
Each risk can be examined before closing.
If debt is central to the return case, test whether the company can still fund working capital, people, systems, and capital expenditures when results fall below plan. If margin expansion is important, identify where it will come from and whether customer service or product quality bears the cost. If acquisitions are required, ask who will source, finance, integrate, and lead them. If key managers are expected to stay, make sure authority and incentives match the responsibility they will carry.
Also study governance. Who controls the budget? Which decisions require board approval? What happens if the company misses a covenant or needs additional equity? How are disagreements resolved? An attractive plan can become fragile when no one has defined the downside process.
This is not an argument against private equity. It is an argument for treating the post-close operating model with the same rigor as the purchase price. The source of failure is often visible in the assumptions long before it appears in the financial statements.