A strategic acquirer often prefers to pay cash. Why does a PE firm instead rely heavily on debt?

• Strategic acquirers never actually pay cash either, so the two buyers finance deals the same way
• Leverage lets the sponsor route the deal through debt to avoid taxes on the acquisition
• PE firms are prohibited by fund rules from funding an acquisition with their own cash, so they are forced to borrow the full purchase price regardless of the return math
• Debt is always cheaper than deploying cash, so leverage beats an all-cash deal in every case, meaning a sponsor could never lose money by simply borrowing more of the purchase price
• A sponsor uses debt to minimize its equity check and amplify returns, lacking a strategic's cash and synergies