Topic
The business of private equity
8 articles drawn from The Ownership Equation, its 22 industry studies and 92 firms profiles.
Guide
How an LBO Works: A Step-by-Step Leveraged Buyout Example
A worked leveraged buyout example with real arithmetic: sources and uses, the debt schedule, free cash flow, exit value, MOIC and IRR, and what moves the result.
9 min read
Guide
How Private Equity Firms Value a Company: A Practitioner's Guide
How private equity firms value companies: comps, precedents, DCF and the LBO model, plus quality of earnings and the EV-to-equity bridge, with worked numbers.
8 min read
Case study
The RJR Nabisco Buyout: What Barbarians at the Gate Got Right
KKR won RJR Nabisco for $109 a share in 1988, the biggest LBO of its era. Investors earned roughly break-even. Here is why the deal disappointed.
8 min read
Case study
The TXU Buyout: How the Largest LBO Became Energy Future Holdings
KKR, TPG and Goldman bought TXU for about $45 billion in 2007. Shale gas collapsed power prices, and Energy Future Holdings went bankrupt in 2014. Here is why.
7 min read
Explainer
What Is a Continuation Fund? GP-Led Secondaries Explained
A continuation fund lets a private equity firm sell a company from an old fund to a new one it also manages. How the deals work, how they are priced and the conflicts.
7 min read
Explainer
What Is a Dividend Recap? How Private Equity Pays Itself Early
A dividend recap adds debt to a portfolio company to pay its private equity owners a dividend. See the math, why IRR rises while MOIC falls, and the risks.
7 min read
Case study
Why Toys "R" Us Went Bankrupt: Debt, Amazon and a 2005 Buyout
Toys "R" Us filed for Chapter 11 in 2017 and liquidated its US stores in 2018. Here is how a 2005 buyout's debt and a changing toy market combined to sink it.
7 min read