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Private Equity and LBOs: mechanisms, challenges, and prospects
05/26/2025
Article by Patrick DAGUET, Academic Director of the Executive Postgraduate Program in Financial Management*.
Private equity is a form of financial operation that involves investing in companies that are not listed on the public stock exchange, often to support their development or restructuring. Among the strategies used by private equity funds, leveraged buyouts (LBOs) are one of the most iconic. This financial technique allows a company to be acquired using a significant amount of debt, which is repaid using the cash flow generated by the company itself. The aim of an LBO is to maximize the return on invested capital.