Using a unique proprietary data set of 460 realized buyouts completed between 1990 and 2005, we examine the risk appetite of private equity (PE) sponsors in different states of the PE market and analyze key determinants of deal-level equity risk. We develop a new approach to mathematically model...

The authors use proprietary loan contracts and financial information negotiated between banks and private equity sponsors to explore the financial covenant structure and the determinants of covenant restrictiveness in a large set of leveraged buyouts. With respect to the covenant structure, we...