We develop and test a model of debt structure and pricing in leveraged buyouts (LBOs). The model accounts for both market and firm specific variables and illustrates how collateral, security and seniority, as well as target future cash-flows and market interest rates determine the cost of...

Exploiting a unique opportunity offered by the Italian private equity (PE) market, we examine the hitherto largely unexplored internal rate of return (IRR) of PE investments. Our database covers the entire universe of transactions sponsored by Italian PE investors in Italy up to 2007 and offers...