Respectfully, I believe it is you who is mistaken about what private equity is.

Typically, private equity (PE) firms will purchase companies via leveraged buyouts, i.e. using large amounts of borrowed capital.

From the Harvard Business Rewiew...

"Private equity funds are illiquid and are risky because of their high use of debt; furthermore, once investors have turned their money over to the fund, they have no say in how it’s managed."

"Private equity has enjoyed an unfair tax advantage, but this has been primarily because of corporate capital gains taxes, not private equity firms’ use of interest payments on debt financing to shield profits from tax."

From the Toys "R" Us Wikipedia page...

"On March 17, 2005, a consortium of Bain Capital Partners LLC, Kohlberg Kravis Roberts (KKR) and Vornado Realty Trust announced a $6.6 billion leveraged buyout of the company."

Just one example of PE using borrowed money to buyout a public company. Almost all are leveraged buyouts. When have you ever know "high-net-worth individual" to use their own money when they can use the capital of others?

What PE firms used to do was find a floundering publicly traded company, buy a controlling stake in said company, take it private, and then turn the business around to make it profitable again, and then sell the company for a profit.

Now, they do the same thing but instead of turning the company around (why do that anymore, it takes actual work), they load the company up with debt (including the debt they used to purchase the controlling stake), and extract all the wealth from the company by selling all its assets, whether that's real estate, patents, brand names, etc., then running the business into the ground and taking it into bankruptcy. They make way more money this way, with their debtors holding the empty bag.

And if they don't take the company private, they do all the things I mentioned above but they also short their own company's stock while they're stripping the assets from the company. Heavily shorting the stock drives its stock price even lower, making their short investment even more valuable. Rinse and repeat. When the company does go bankrupt, once again the debtors are left holding the empty bag (i.e. claims against whatever assets the bankrupt company has left, and surprise, surprise, nothing of value is left because the PE firm sold it all off or reorganized it into a separate company).

And when they short a stock, they get paid immediately when they sell those borrowed shares at the current stock price. And then the company goes bankrupt, they never have to close their position. The money they made shorting is all profit, minus whatever fees they paid on the borrowed shares until the company goes bankrupt.

AND HERE'S THE REAL KICKER... because they never have to close their short position (because the company is now bankrupt), they don't ever have to pay tax on that profit they made. A real legal scam. They are leeches upon society.

Here's what PE did to Radio Shack...

"The company had received a $250,000,000 cash infusion in 2013 from Salus Capital Partners and Cerberus Capital Management. This debt carried onerous conditions, preventing RadioShack from gaining control over costs by limiting store closures to 200 per year and restricting the company's refinancing efforts. With too many underperforming stores remaining open, the chain continued to spiral toward bankruptcy."

PE gave them a loan with such bad terms that it would send the company into bankruptcy. Why would a firm do this? Why would it tie the company's hands from being able to refinance or close additional underperforming stores? Because they wanted it to go bankrupt to capitalize on the short sale scam I mentioned above.