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Lessons from Private Equity Any Company Can Use
book

Lessons from Private Equity Any Company Can Use

by Orit Gadiesh, Hugh Macarthur
February 2008
Beginner
126 pages
1h 56m
English
Harvard Business Review Press
Content preview from Lessons from Private Equity Any Company Can Use

Define the Full Potential

The PE game has changed, and here is how.

The way PE funds made money in the 1980s, and for most of the 1990s, was relatively simple. They used networks of contacts to source proprietary deals. Next, they loaded these assets up with debt, sometimes up to 90 percent of the capital structure, thus keeping the equity check needed to buy the business very modest. Over time, as these assets threw off cash, the debt was paid down. Eventually the assets were sold—often for a higher multiple of earnings before interest, taxes, depreciation, and amortization (EBITDA, a measure often used as a proxy for cash flow from operations)—in rising markets. The combination of low entry prices, lots of leverage, and higher exit multiples ...

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Publisher Resources

ISBN: 9781422156322