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If you work in a PE shop you’d know it’s not riskfree and that the PE firm also puts their own money up plus money raised through LPs (hence “leveraged”)
by refurb 7mo ago
If you work in a PE shop you’d know it’s not riskfree and that the PE firm also puts their own money up plus money raised through LPs (hence “leveraged”)
- mbesto 7mo agoNot sure your point, but... > PE firm also puts their own money up plus money raised through LPs (hence “leveraged”) This is not true. PE firm individuals put their own money in a fund, which also has LPs money. That fund is used to acquire businesses and in order to fund a transaction they use both equity (capital from that fund) and debt (loans from banks) to fund the transaction. The debt is the "leverage" part of the equation...hence leveraged.
- refurb 7mo agoMy point is that it’s certainly not risk-free which was the claim of the comment I replied to.