Capitalizing Private Company - PE

If a PE company acquires 100% of a business, equity from the fund is use and shares are issued at some value to reflect equity ownership . Let's say it's a stock deal, so sellers sell their shares in the company to the PE buyer. Now, let's say the same transaction occurs, but the PE firm uses 100% debt financing to acquire the business. Are new shares issued to the buyer for the purchase of the sellers' shares and, if not, then what happens to the sellers' existing ownership shares in the business they are selling?

 

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