Swedish serial acquirer Bergman & Beving uses a "profit to working capital > 45%" ratio as its core KPI. This forces subsidiaries to generate enough cash to cover taxes, dividends, and internal investments, ensuring growth is self-funded and disciplined without relying on external capital.

Granite Creek intentionally uses less debt than typical PE firms to ensure portfolio company CEOs are not constrained by covenants. This empowers them to make sound operational investments for long-term growth, rather than focusing on short-term bank relations or fearing covenant breaches.

After a large, debt-funded acquisition, deleveraging should be the top priority over share buybacks. Choosing buybacks sends a mixed signal, disappoints investors expecting a return to the growth playbook, and leaves the company too financially constrained to pursue future strategic M&A opportunities.

The best time to raise money is when your company doesn't desperately need it. Approaching investors from a position of strength gives you leverage. If you wait until you're desperate, you will be forced to accept expensive, highly dilutive capital.

Despite massive debt issuance, large tech companies intentionally avoid committing to specific credit ratings or leverage targets. Instead, they use vague language about maintaining "strong balance sheets." This is a strategic choice that signals to investors they are preserving maximum flexibility to add significant debt to their capital structures to fund the multi-year AI investment cycle.

Unlike firms that maximize leverage, Triton intentionally keeps debt levels low—likening it to water around the ankles or knees, not the head. This conservative approach is a core strategy to ensure portfolio companies have the financial flexibility to undergo significant operational improvements.

The market penalizes even stable, cash-generative businesses for high leverage (e.g., >3.5x debt/EBITDA). This creates a "distress multiple," as investors price in tail risk from events like interest rate spikes. Deleveraging is critical to remove this discount and achieve multiple expansion.

Garnett Station Partners avoids leverage at the start of a consolidation. This provides flexibility to move quickly on acquisitions and invest heavily in G&A without the restrictive pressure of bank covenants, de-risking the critical early growth and integration phase.

After the problematic Bowwater acquisition, Home Depot's founders realized their growth ambitions were outpacing operational capacity. In an act of self-regulation, they asked their board to pass a resolution capping annual growth at 25%, using their governance structure to enforce discipline and prevent future mistakes.