Debt and Private Equity

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• Debt and Private Equity
• Mario Levis

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The Private Equity

• Intense media interest
• Heated debate
• Recent official reports
• FSA
• House of Commons Treasury Committee
• Walker Consultative Paper
• BoE, IMF, ECB
• On going government review
• Baucus-Grassley Senate Bill Levin, Congress

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Capital StructureFrom textbook to PE practice
Textbook Listed Co.
LBO High Level
LBO Debt Zoom in
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How much debt is right?
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Key research questions

• Are PE-backed companies decisions consistent
  with existing theory?
• What are the drivers of leverage for PE-backed
  and LBOs?
• Why the significant differences between PE-backed
  and other companies?
• Are current levels of leverage sustainable?
• Why PE-backed companies change capital structures
  over time? How?
• How ownership affects financing decisions?
• Are the higher levels of debt in PE-backed
  companies related to corporate governance? How?
  Why?
• What are the different types/characteristics of
  debt used by PE-backed companies? How they impact
  on capital structure?
• What is likely to be the impact of corporate
  taxation changes on PE capital structures?