how does a LBO fund work? for example say goldman has a 20 billion LBO fund, i thought LBO deals were funded with 90% debt. is this the 10% capital to be used outside of the debt?
my question is how is the capital of an LBO fund used if leverage is the main funder of these deals.
any help is appreciated. i'm trying to learn. thanks.
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HA! 90% debt? You're lucky if you can get 50% right now.
To answer your question though, the $20 billion would refer to the equity capital in the fund. That $20 billion could support around twice that in buyouts, depending on the leverage available at the times of the various deals.
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