For a number of brands and retailers on the edge of bankruptcy, there is a bigger culprit for their woes than the state of traditional retail: debt. When Toys R Us filed for Chapter 11 bankruptcy in March, it had over $5 billion in debt, which, prior to the announcement, necessitated annual payments of $400 million. Nine West filed for Chapter 11 this month with over $1 billion in debt that it owed to over 50,000 creditors. The list goes on and on.

The two examples above—and many others—are the result of leveraged buyouts, whereby a private equity firm buys a company, saddles it with debt, and then extracts fees that are often uncorrelated to the success of this very portfolio company. Sycamore Partners, which owned Nine West, is a forerunner of this strategy, which often includes dismantling the company and selling off its profitable assets, stripping it down to a skeleton of what it once was. The process sits somewhere between a garage sale and a chop shop.

When it comes to the strategy outlined above, the portfolio companies are forced to use their cash flow to pay down debt, rather than investing in the future. Cash is finite, so every dollar that goes to pay off debt detracts from investment in operations, people or technology that will help a company succeed in the competitive landscape. For example, General Mills and Pepsico spent approximately 1.4% and 1.2% of their revenue on research and development in 2017, respectively. But Kraft Heinz, acquired by the cost-cutting 3G in 2015, spent only 0.3%—a small percentage that dwindles further today. These numbers pale in comparison to those of companies in the tech world—in 2017, Amazon spent almost 9% of revenue on R&D.

While debt has proved problematic for bigger companies, it can also be a savior for smaller ones. In the direct-to-consumer horse race, brands are trying to scale faster than their competitors—most companies have turned to selling equity in exchange for money that ends up in marketing or inventory. But there are only 100 points of a company to sell; soon enough, founders, employees and investors are diluted, which hinders the company’s ability to keep growing profitably.

However, a growing crop of these companies are turning to debt in order to finance their operations—especially their inventory—with two positive effects: 1) This forces companies to be profitable and have good cash flow (in order to afford the debt payments), and 2) it allows founders and employees to retain more equity, which will be more valuable in the long run, especially if the company is profitable. Ideally, this setup allows companies to spend their investors’ money backing people and technology, and then debt is used to invest in marketing and inventory.

The reality is that debt, like most tools a business has at its disposal, is not inherently good or bad—it’s all about how it gets used. To grow and prevent dilution, more emerging companies should use it to secure their future profitability—at the same time, the largest companies need to stop exploiting it to their own detriment. Today, as more and more equity is sold, which in turn skyrockets valuations and hinders activity in the consumer goods acquisition landscape, debt will become increasingly relevant as a disciplined growth alternative.