The Determinants of Leveraged Buyout Activity

Rapid growth in allocation of investor’s financial resources to Private Equity funds focused on Leverage Buyout activity is one of the most significant shifts in international investment landscape occurred in the first decade of XXI century. Indeed, it was a strong decade for private equity industry as a whole, with a long-run fundraising dynamics, great number of funds closed as well as sound track record of successfully conducted deals. Whereas, private equity, being rather dynamic and flexible industry, adjusts its screening, selection and managerial strategies in accordance with actual business environments, legal infrastructure and macroeconomics conditions on a regular basis. Furthermore, leveraged buyout community was forced to revise its screening strategy: instead of selecting primary big mature businesses with predictable cash flows, excellent market position, significant asset base as well as measurable risk and predictable exit opportunities, managers increasingly began to pay attention on smaller technology firms with less-developed product, valuable intellectual property assets and less stable market position.