Private Equity Is Getting Companies Hooked on Debt

摘要

Private equity couldn't exist without debt. It's the jet fuel that makes a corporate acquisition so lucrative for a turnaround investor. The more debt you can raise against a target company, the less cash you need to pay for it, and the higher your return on that cash once you sell.Ultralow interest rates have made this fuel especially potent and easy to obtain. The market for leveraged loans-industry jargon for loans made to companies with less-than-stellar credit-has doubled in the past decade. Almost 40% of all such loans outstanding are to companies controlled by private equity, according to data from Dealogic.