Debt What is the big deal about debt in private equity transactions?
The media typically describes acquisitions by private equity fi rms as ‘leveraged buyouts’, a reference to the use of financial leverage, or debt, to acquire a company. Similar to a mortgage on a house, a private equity fi rm will borrow debt from a lending institution in order to ‘lever’ its equity investment. While some private equity fi rms will utilize as much debt as banks are willing to lend, DW Healthcare Partners is considerably more conservative in the use of debt. DWHP seeks to partner with companies that exhibit signifi cant historical growth, and if debt is not used wisely, it could significantly stifle the company’s operations.