A leveraged buyout (LBO) is one company's acquisition of another company using a significant amount of borrowed money (leverage) to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loans, along with the assets of the acquiring company. The use of debt, which normally has a lower cost of capital than equity, serves to reduce the overall cost of financing the acquisition. The cost of debt is lower because interest payments often reduce corporate income tax liability, whereas dividend payments normally do not. This reduced cost of financing allows greater gains to accrue to the equity, and, as a result, the debt serves as a lever to increase the returns to the equity.
In the field of finance, the term private equity (PE) refers to investment funds, usually limited partnerships (LP), which buy and restructure financially weak companies that produce goods and provide services. A private-equity fund is both a type of ownership of assets and is a class of assets, which function as modes of financial management for operating private companies that are not publicly traded in a stock exchange.
KKR & Co. Inc., also known as Kohlberg Kravis Roberts & Co., is an American global investment company that manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate, credit, and, through its strategic partners, hedge funds. As of December 31, 2021, the firm had completed more than 650 private equity investments in portfolio companies with approximately $675 billion of total enterprise value. As of December 31, 2021, assets under management ("AUM") and fee paying assets under management ("FPAUM") were $471 billion and $357 billion, respectively.
Distressed securities are securities over companies or government entities that are experiencing financial or operational distress, default, or are under bankruptcy. As far as debt securities, this is called distressed debt. Purchasing or holding such distressed-debt creates significant risk due to the possibility that bankruptcy may render such securities worthless.
Bain Capital is an American private investment firm based in Boston. It specializes in private equity, venture capital, credit, public equity, impact investing, life sciences, and real estate. Bain Capital invests across a range of industry sectors and geographic regions. As of 2022, the firm managed approximately $160 billion of investor capital. The firm was founded in 1984 by partners from the consulting firm Bain & Company. The company is headquartered at 200 Clarendon Street in Boston with 22 offices in North America, Europe, Asia, and Australia.
Oaktree Capital Management is an American global asset management firm specializing in alternative investment strategies. As of March 31, 2022, the company managed $164 billion for its clientele.
Van Houtte Inc. is a company based in Montreal, Quebec, Canada that processes, distributes and sells coffee and coffee related goods. They have expanded their product selection, which now includes tropical teas, sandwiches and salads. It was founded by Albert-Louis Van Houtte.
In finance, the private-equity secondary market refers to the buying and selling of pre-existing investor commitments to private-equity and other alternative investment funds. Given the absence of established trading markets for these interests, the transfer of interests in private-equity funds as well as hedge funds can be more complex and labor-intensive.
Apollo Global Management, Inc. is an American global private-equity firm. It provides investment management and invests in credit, private equity, and real assets. As of March 31, 2022, the company had $512 billion of assets under management, including $372 billion invested in credit, including mezzanine capital, hedge funds, non-performing loans, and collateralized loan obligations, $80.7 billion invested in private equity, and $46.2 billion invested in real assets, which includes real estate and infrastructure. The company invests money on behalf of pension funds, financial endowments, and sovereign wealth funds, as well as other institutional and individual investors. Since inception in 1990, private-equity funds managed by Apollo have produced a 24% internal rate of return (IRR) to investors, net of fees.
AlpInvest Partners is a global private equity asset manager with over $85 billion of committed capital since inception as of December 31, 2022. The firm invests on behalf of more than 450 institutional investors from North America, Asia, Europe, South America and Africa.
CCMP Capital is an American private equity investment firm that focuses on leveraged buyout and growth capital transactions. Formerly known as JP Morgan Partners, the investment professionals of JP Morgan Partners separated from JPMorgan Chase on July 31, 2006. CCMP has invested approximately $12 billion in leveraged buyout and growth capital transactions since inception. In 2007, CCMP was ranked #17 among the world's largest private equity funds.
The history of private equity and venture capital and the development of these asset classes has occurred through a series of boom-and-bust cycles since the middle of the 20th century. Within the broader private equity industry, two distinct sub-industries, leveraged buyouts and venture capital experienced growth along parallel, although interrelated tracks.
JLL Partners is an American private equity firm focused on leveraged buyout transactions and leveraged recapitalizations of middle-market companies. The firm is headquartered in New York City, and was founded in 1987. Since its founding JLL Partners has committed approximately $4.7 billion across seven funds. JLL invests in various industries including food and consumer products, automotive parts, health care, media and telecommunications, commodity and specialty chemicals, building products, transportation, and industrial manufacturing and distribution. The company tends to focus on companies requiring an operational turnaround.
Private equity in the 2000s represents one of the major growth periods in the history of private equity and venture capital. Within the broader private equity industry, two distinct sub-industries, leveraged buyouts and venture capital expanded along parallel and interrelated tracks.
Blackstone Credit, formerly known as GSO Capital Partners is an American hedge fund and the credit investment arm of The Blackstone Group. GSO is one of the largest credit-oriented alternative asset managers in the world and a major participant in the leveraged finance marketplace. The firm invests across a variety of credit oriented strategies and products including collateralized loan obligation vehicles investing in secured loans, hedge funds focused on special situations investments, mezzanine debt funds and private equity funds focused on rescue financing.
MatlinPatterson is a distressed securities fund that participates in distressed and credit opportunities on a global basis. The firm was established in 2002 as a spinout from Credit Suisse First Boston. It is headquartered in New York City and has offices in London and Hong Kong. MatlinPatterson was founded by David Matlin and Mark Patterson. MatlinPatterson, through MatlinPatterson Global Advisers, manages private equity vehicles with a distressed-for-control mandate as well as an open-ended strategy seeking non-control credit investment opportunities.
Metalmark Capital, formerly Morgan Stanley Capital Partners is a private equity firm focused on leveraged buyout investments in middle-market companies across a range of industries. Metalmark was acquired by Citigroup Alternative Investments in December 2007.
Trimaran Capital Partners is a middle-market private equity firm formerly affiliated with CIBC World Markets. Trimaran is headquartered in New York City and founded by former investment bankers from Drexel Burnham Lambert. Trimaran's predecessors were early investors in telecom and Internet businesses, most notably backing Global Crossing in 1997. Trimaran also led the first leveraged buyout of an integrated electric utility.
Genstar Capital is a private equity firm that executes leveraged buyout transactions in middle-market companies based in North America. Founded in 1988, Genstar currently has approximately $33 billion in assets under management.
Centerbridge Partners is a multi-strategy private investment firm focused on leveraged buyouts and distressed securities.
