It wasn’t so much to become “too big to fail” as it was “become so indebted as to be an undesirable acquisition for Sandy and Stewie.”

As others stated, the leveraged buyout creates a large debt obligation. It can be as much as 90% of the total purchase price, and by its very nature ties up part of the future revenue produced by the target (Pierce in this case) so the buyer can make payments toward the debt. It’s also common for the debt to be secured by the assets of both the buyer and the target, so the lender itself is able to acquire those assets or force the sale and take 100% of the proceeds if there is a default.

So the idea was with Waystar taking on billions of dollars in additional debt, part of the Pierce revenue stream being committed to paying that debt, and Waystar and Pierce assets now being subject to a security interest (no longer owned “free and clear” by Waystar), Sandy and Stewie would abandon their efforts because the value they expected to get from their acquisition will have changed.