For most of the 133 years since its founding in a small city in Wisconsin, the Simmons Bedding Co. enjoyed an illustrious history.

Presidents have slumbered on its mattresses aboard Air Force One. Dignitaries have slept on them in the Lincoln Bedroom. Its advertisements have featured Henry Ford and H.G. Wells. Eleanor Roosevelt extolled the virtues of the Simmons Beautyrest mattress, and the brand was immortalized on Broadway in Cole Porter's song "Anything Goes."

Its recent history has been notable, too, but for a different reason.

Simmons says it will soon file for bankruptcy protection, as part of an agreement by its owners to sell the company -- the seventh time it has been sold in a little more than two decades -- all after being owned for short periods by a parade of different investment groups, known as private-equity firms, which try to buy undervalued companies, mostly with borrowed money.

For many of the company's investors, the sale will be a disaster. Its bondholders alone stand to lose more than $575 million. The company's downfall has also devastated employees like Noble Rogers, who worked for 22 years at Simmons, most of that time at a factory outside Atlanta. He is one of 1,000 employees -- more than one-quarter of the work force -- laid off last year.

But Thomas H. Lee Partners of Boston has escaped unscathed. The investment firm, which bought Simmons in 2003, has pocketed around $77 million in profit, even as the company's fortunes have declined. THL collected hundreds of millions of dollars from the company in the form of special dividends. It also paid itself millions more in fees, first for buying the company, then for helping to run it. Last year, the firm even gave itself a small raise.

Wall Street investment banks also cashed in. They collected millions for helping to arrange the takeovers and for selling the bonds that made those deals possible. All told, the various private-equity owners have made around $750 million in profits from Simmons over the years.

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A cautionary tale » How so many people could make so much money on a company that has been driven into bankruptcy is a tale of these financial times. Every step along the way, the buyers put Simmons deeper into debt. The financiers borrowed more and more money to pay ever higher prices for the company, enabling each previous owner to cash out profitably.

But the load weighed down an otherwise healthy company. Today, Simmons owes $1.3 billion, compared with $164 million in 1991, when it began to become a Wall Street version of "Flip This House."

In many ways, what private-equity firms did at Simmons, and scores of other companies like it, mimicked the subprime mortgage boom. Fueled by easy money, not only from banks but also endowments and pension funds, buyout kings like THL upended the old order on Wall Street. It was, they said, the Golden Age of private equity -- nothing less than a new era of capitalism.

These private investors were able to buy companies like Simmons with borrowed money and put down relatively little of their own cash. Then, not long after, they often borrowed even more money, using the company's assets as collateral -- just like home buyers who took out home equity loans on top of their first mortgages. For the financiers, the rewards were enormous.

Twice after buying Simmons, THL borrowed more. It used $375 million of that money to pay itself a dividend, thus recouping all of the cash it put down, and then some.

THL was guaranteed a profit regardless of how Simmons performed. It did not matter that the company was left owing far more than it was worth, just as many people profited from the mortgage business while many homeowners found themselves under water.

Investors who bought that debt are getting virtually nothing in the new deal.

"From my experience, none of the private-equity firms were building a brand for the future," said Robert Hellyer, Simmons former president, who worked for several of the private-equity buyers before being asked to leave the company in 2005. "Plus, the mind-set was, since the money was practically free, why not leverage the company to the maximum?"

Just as with the housing market, the good times ended when the economy fell into recession and the credit markets froze. Simmons is groaning under a huge amount of debt at a time when its sales are slowing. And this time there is no escaping by finding yet another buyer willing to shoulder its entire burden.

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Simmons not alone » Simmons is one of hundreds of companies swept up by private-equity firms in the early part of this decade, during the greatest burst of corporate takeovers the world has ever seen. Many of these deals, cut in good times, left little or no margin for error -- let alone for the Great Recession.

A disproportionate number of the companies that were acquired during that frenzy are now struggling with the enormous debts. More than half the roughly 220 companies that have struggled with their debt this year were either owned at one time or are still controlled by private-equity firms, according to analysts at Standard & Poor's. Among them are household names like Harrah's Entertainment and Six Flags Theme Parks.

Executives at THL counter that Simmons was the victim of hard economic times, not mismanagement or too much debt. As proof, executives point to Simmons' 40 percent growth in sales and its 26 percent climb in operating income from 2003 through 2007, as well as its 13 consecutive quarters of market share gains against competitors through March 2009.

Simmons' woes, said Scott Schoen, a co-president of the firm who sat on Simmons board, are entirely caused by the "unprecedented and unforeseeable" downturn that has shaken the entire bedding industry.

Simmons has been a part of that industry since the 19th century. Like other emerging industrialists of the late 1800s, Zalmon Simmons, of Kenosha, Wis., had his hand in numerous businesses -- the local bank, a telegraph company, a railroad and a cheese-box factory. He was even, for a time, the mayor of Kenosha.

Around 1876, Simmons came across a new machine that could mass-produce woven wire mattresses. The Simmons bedding company was born.

From its humble beginnings, Simmons grew to become one of the country's largest manufacturers of mattresses. Along the way, it even sprinkled a little Hollywood pixie dust on the ho-hum mattress business, hiring Dorothy Lamour and Maureen O'Hara to plug its products.

Until the 1970s, Simmons largely prospered. Then the troubles started, and the company was soon buried deep inside two enormous conglomerates, Gulf & Western and the Wickes Corp., for a number of years.

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A revolving door » But in the mid-1980s, Simmons caught the attention of a new type of investor. The businesses that stormed corporate America in recent years under the banner of private equity were not always called private-equity firms. In the 1980s, they were known as leveraged buyout shops. Their strategy is essentially unchanged, however. They try to buy undervalued companies, using mostly borrowed money, fix them up and sell them for a fast profit.

Simmons' first trip through the revolving door of private equity came in 1986. William Simon, a private-equity pioneer and a Treasury secretary under Richard Nixon, was the man with the golden touch. In 1986, his investment firm, Wesray Capital, and a handful of Simmons top managers acquired the company for $120 million, the bulk of which was borrowed. After selling several businesses to pay back some of the money it had borrowed, Wesray cashed out in 1989. It sold Simmons to the company's employee stock ownership plan for $241 million.

The deal was a fiasco for the employees. As part of the buyout, Simmons stopped contributing to its pension plan, because the stock ownership plan shares were meant to pay for the employees' retirements. But then the bottom fell out of the housing market and Simmons, with its large debt, stumbled. Its pensions crumbled as the value of the stock plan shares plunged.

A succession of private-equity buyers came and went. Merrill Lynch Capital Partners bought Simmons in 1991 for $32 million for a 60 percent stake in the company and the assumption of its debt. Merrill sold it to Investcorp, an investment group based in Bahrain, for $265 million in 1996. Two years later, Investcorp sold the company to Fenway Partners for $513 million.

During Fenway's tenure, Simmons released one of the industry's biggest innovations, the no-flip mattress. Profits soared. But after five years, Fenway executives decided to cash out. By the fall of 2003, Simmons was back on the block.

A longtime figure in investment circles, Thomas H. Lee vaulted into the big leagues of private equity with what is regarded as one of the legendary deals of all time. After founding Thomas H. Lee Partners in 1974, he grabbed headlines in 1994 when he sold Snapple, the iced tea maker, for $1.7 billion to Quaker Oats. He had bought the company two years earlier for around $130 million.

Lee, scion of the family that founded the Shoe Corp. of America, left his namesake firm in 2006 to start another investment company. During his 30-year tenure at THL, his firm invested in a series of big names -- Ghirardelli Chocolate, Petco Animal Supplies and General Nutrition Cos., among others. And by 2003, as the buyout boom began to build, his firm had Simmons in its cross hairs.

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THL moves in » The fall of 2003 was little more than a blur of meetings and presentations for Robert Hellyer, the former Simmons president who is among the fourth generation of his family involved in the mattress industry. In eight weeks, the company was shown to 20 private-equity suitors in the corporate version of speed dating.

The list of potential buyers was quickly whittled to three and finally to THL, whose $1.1 billion bid for the company consisted of $327 million in new equity from the firm and more than $745 million in bonds and bank loans that had to be raised from investors.

From the get-go, the lofty price the firm paid for Simmons and the amount of debt raised red flags on Wall Street. "The higher debt burden will limit the company's ability to respond to unexpected negative business developments, including economic or competitive threats or internal missteps," analysts at Moody's Investors Service warned at the time.

But nobody, it seems, was listening. Six months after acquiring Simmons, THL set in motion plans to take the company public, and with the company's debt climbing, Simmons executives had to aim high with new products -- and pray they were right.

In late 2004, in a blitz of marketing, Simmons unveiled the HealthSmart mattress, a line aimed at combating dust mites, mold and germs. It featured a zip-off top that could be washed or dry cleaned, but HealthSmart was a flop because consumers thought the zip-on cover was troublesome. Company sales slid nearly 8 percent in the first quarter from the previous year. THL shelved its plans to take Simmons public, and the company shook up its sales division. By the third quarter 2005, Simmons had "one of the best quarters in the company's entire history," a spokesman for THL said in an e-mail message. The numbers tell a slightly different story. Net sales declined 4.8 percent in that quarter from a year earlier, and operating income fell to $25.1 million, from $25.5 million in the third quarter of 2004.

By early 2007, at the very top of the credit market bubble, THL took a bit more out of Simmons. It created a holding company that it used to issue $300 million more in debt, which paid an additional $238 million dividend to the private-equity firm. With that, THL had recouped its entire $327 million equity investment in Simmons and booked a profit of around $48 million. (It made an additional $28.5 million in various fees over the years.)

THL was hardly alone in undertaking this sort of financial engineering, known as a dividend recapitalization. From 2003 to 2007, 188 companies controlled by private-equity firms issued more than $75 billion in debt that was used to pay dividends to the buyout firms.

As the economy soured in late 2007, so did Simmons' sales. The company slashed costs and cut jobs throughout 2008. But last fall, unable to meet the terms of its bank loans and debt dating back to the 2003 acquisition itself, Simmons stopped making interest payments to its bondholders. THL began talking to the banks and bondholders about how to lighten Simmons' debt load, and put the company up for sale.