PEINVEST
The acquisition of a company using a significant amount of borrowed money (debt) to fund the purchase price. The target company's assets and cash flows typically serve as collateral for the debt, allowing PE firms to amplify equity returns.
A transaction in which a company's existing management team, often backed by a PE sponsor, acquires a controlling ownership stake. MBOs rely on management's deep knowledge of the business and align incentives for post-acquisition value creation.
Earnings Before Interest, Taxes, Depreciation, and Amortization—a widely used proxy for operating cash flow in PE valuations. EBITDA multiples are the most common valuation metric for buyout transactions, allowing comparison across companies with different capital structures.
The total value of a company, calculated as market capitalization plus net debt minus cash. Enterprise value represents the theoretical takeover price and is the basis for EV/EBITDA multiples commonly used in PE deal pricing.
An alternative asset class consisting of capital invested in private companies or used to take public companies private. PE firms raise funds from institutional investors and high-net-worth individuals, investing in companies to create value through operational improvements, strategic repositioning, and financial engineering.