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Industry study 01 of 22 · Private Equity Research Companion

Leveraged Buyouts (LBOs)

~6,000 words · 2 technical exhibits

The leveraged buyout is the core product of private equity. A sponsor buys control of a company with a small slice of equity and a large slice of borrowed money, and repays that debt from the company's own cash flow. Everything else in this industry (growth equity, secondaries, continuation vehicles, private credit) either grew out of the LBO or exists to serve it.

What the study covers

  1. 1Overview
  2. 2How it works
  3. 3Economics and key numbers
  4. 4Key players and landmark deals
  5. 5Risks and pitfalls
  6. 6How an expert thinks about it
  7. 7Glossary
  8. 8Related sections

Technical exhibits

Worked examples, checklists and case studies included with this study.

Case Studies Rjr Txu Hilton

Three landmark deals: one that made the industry famous, one that destroyed equity, one that was saved by patience

LBO Candidate Screening Checklist

A practical first-pass screen with quantitative thresholds and red flags