Private equity firms often use leveraged buyouts to acquire new companies

Cheap debt and relatively minimal regulation fueled private equity's expansion

Low interest rates in the 2010s made taking on debt cheap, making leveraged buyouts incredibly lucrative. Private equity firms were able to make large deals quickly, in part because they don't face the same disclosure requirements and shareholder approval processes as public companies. These two factors juiced the growth of private funds.

Private equity deals sometimes come with layoffs

To increase profits, private equity firms often try to streamline and consolidate operations within the companies they acquire as much as possible. They also often alter company business models, expanding into new product offerings and markets that could necessitate team changes.

The first private equity fund was launched in 1960

At the time, the industry—and the public's understanding of it—was rather limited, and few private equity firms existed until the 1980s. The first leveraged buyout is thought to have taken place in 1955.

Private equity firms can be 'powerful partners' or 'formidable competitors'

Under the best circumstances, PE firms can increase a company's value using strategies that might not be suitable for public companies facing pressure for immediate shareholder returns. But PE firms are often portrayed negatively due to the aggressive strategies they sometimes use to cut inefficiencies. As PE has grown, many firms have changed their strategies, shifting away from aggressive scaling to more integrated acquisitions.

Private equity companies are selling off more acquisitions—but at much lower prices

In 2025, private equity exits were up by 5.4%, but the total value of those deals was down by 21.2% year-over-year. An exit occurs when a private equity firm either sells an acquired company or takes that company public.

Private equity is viewed as an alternative investment

These different types of private equity include venture capital, growth equity, and buyouts.

PetSmart and Hilton are among 10 of the most famous leveraged buyouts in history

Some of the most famous leveraged buyout deals include Blackstone's 2007 acquisition of Hilton Hotels, in which Blackstone took the then-public company private and then returned it to the public markets in 2013. A British PE firm bought PetSmart for $9B in 2014—one of the most expensive leveraged buyouts since 2007.

The majority of capital in private equity funds is provided by institutional investors

The individuals who invest this initial capital are called the firm's limited partners. Private equity firm LPs include sovereign wealth funds, university endowments, high-net-worth individuals, and more.

Should companies be owned by their workers?

In the last half-century, so-called private equity has transformed industries by purchasing private companies, cutting costs, loading up debt, and then selling the business at a premium—all at a huge profit to the investors. Workers, on the other hand, are often left with nothing. Listen to how both pro-worker economists and a private equity stalwart are trying to shift ownership to workers—a growing tactic proven to improve worker satisfaction and company value.

Kohlberg Kravis Roberts was the world's largest private equity firm as of 2025

Headquartered in New York City, KKR raised more than $117B between 2020 and 2024. KKR is credited for pioneering the leveraged buyout strategy for private equity in the 1970s and now owns nearly 300 companies.

Between 2016 and 2023, PE spent more than $200B buying British companies

Between the COVID-19 pandemic and the United Kingdom's official departure from the European Union, the UK's economy struggled to recover. This economic strife led to British companies receiving steadily lower valuations than American companies, prompting a huge increase in PE investment. However, interest rates began increasing in 2022, putting pressure on the numerous leveraged buyout deals that took place between 2020 and 2021.

A private equity firm led the leveraged buyout of Toys 'R' Us before the company's bankruptcy

After being acquired by two private equity firms and a real estate company for more than $6B in 2005, Toys 'R' Us filed for bankruptcy in 2017. Many point to the $400M a year the company had to pay to service its debt, as well as increased competition from online retailers like Amazon, for draining its profits and ultimately dragging it under.

See a database of large companies owned by private equity firms

The Private Equity Stakeholder Project tracked more than 200 companies owned by private equity with more than 7,000 employees. Companies on the list include J. Crew, Jersey Mike's Subs, Barnes and Noble, Panera Bread, and Tropical Smoothie Cafe.

See the anatomy of a venture capital firm

Venture capital firms get the money they use to invest in companies from limited partners, also called LPs. It’s the general partner’s job to manage that money and invest it in the right startups.

The funeral home industry is increasingly consolidating via private equity firms

A growing share of the funeral home industry is being acquired by private equity-backed firms. A 2022 article states that about 20% of this $23B business is owned by funeral home chains, and private equity-backed firms own about a quarter of those.

Many investment bankers work on IPOs

When a company undertakes an IPO, investment banks often buy many of the organization’s shares directly from the company, in order to sell the shares on the stock market. The bank stands to profit after marking up the shares.

SPACs, explained

Special purpose acquisition companies make it easy for mature unicorns (companies valued at over $1B) to receive growth capital by going public. This process effectively skips the work of a traditional initial public offering, and its time-intensive investor negotiations. Typically, a well-known investor with expertise in a certain industry sponsors a SPAC with the intent to acquire a startup. Learn how it works and the risks involved here.

An initial public offering or 'IPO' is the process of a private company becoming public by putting shares of the company on the stock market for purchase.

Direct lending typically involves 'senior loans'

Direct lending, the most common subtype of private credit, typically involves senior loans which are secured by a company's assets. "Junior capital," on the other hand, is a type of private credit that is not secured by a company's assets, making it generally riskier than direct lending.

Stock buybacks are when a company purchases some of its own shares of stock

This reduces the number of shares on the market and, therefore, makes the remaining shares more valuable. Buybacks have received a lot of criticism in recent years for many reasons, such as how they could artificially inflate share prices.

Venture capital is a form of funding provided to early-stage companies with high growth potential, typically in exchange for an equity (or ownership) stake

Former US Senator Mitt Romney cofounded a revolutionary private equity firm

Mitt Romney cofounded Bain Capital—a private investment group that manages more than $215B—in the 1980s before becoming a politician. Bain Capital is credited with revolutionizing private equity by focusing on consolidating and streamlining business operations rather than relying on financial engineering to increase company profits.

BNPL companies typically make money via merchant fees rather than interest

When a merchant partners with a buy now, pay later app, consumers are more likely to spend more money with that merchant—meaning that the merchant is willing to pay a small fee in exchange for the ability for customers to pay with buy now, pay later.

Some of LVMH's acquisitions were due to Bernard Arnault's search for undervalued companies

The LVMH CEO didn't mind acquiring companies that were outside the scope of what he had acquired previously—which is part of why LVMH owns such a wide variety of brands, from hotel chains to perfume companies.

Value investing is the strategy of buying assets you believe are worth more than their current price

Famed investor Warren Buffett is known for building his empire with this strategy, which he learned from his mentor Benjamin Graham.

Mortgages are loans used to buy property

A mortgage is a loan used to buy property, like a house. Borrowers typically put down a percentage of the cost of the home, and the amount left over is financed through a lender, like a bank.

Hedge funds, the private investment firms that trade a wide swath of financial assets, make money by imposing steep fees on investors and from the fund's investment performance.

International organizations exploit ultimate beneficial owner policies in different countries to shield bad actors

UBO policies help determine who owns businesses by evaluating who is making the decisions, regardless of the listed owner.

Warren Buffett's former professor Benjamin Graham is known as the 'father of value investing,' a strategy in which investors seek to buy stocks trading below their intrinsic worth.

Telehealth demand for GLP-1s for weight loss is booming as consumers seek easier access.

How Amazon operates a 'flywheel' business model, a self-reinforcing cycle that drives continuous growth

In 2025, four executives from large tech companies were given positions in the US Army Reserves—including Palantir Chief Technology Officer Shyam Sankar, which reinforced Palantir's ties with the US military and its role as a leading defense partner.

Roughly 43 million US borrowers owe roughly $1.7T in student debt, the second-largest source of consumer debt behind mortgages.

About 2,000 US babies are born annually without some portion of their limbs, potentially leading to a lifetime of pricey prosthetics.

Dozens of S&P 500 stocks, including Coca-Cola and Walmart—known as the dividend aristocrats—have increased dividends every year for 25 years

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