Looks like private equity has dried up and here's what I don't understand: How do these LBO's, where there's substantial debt involved, make money? Of course, if the new debt-riddled corporation goes IPO I understand. But let's say the LBO doesn't go IPO. That means they only have these two ways to make money, right? 1.) Sell off its pieces and repay the debts. If the value of the pieces is greater than the business as a whole, the buyer makes a profit. 2.) Buy the company and manage it more efficiently. As long as the company can be managed so that it generates enough cash flow to pay the interest on bonds, the buyer will profit. And that leads to my question: isn't #1 and #2 highly unlikely considering the fact that a) they're saddling the company with 70+% debt and b) they are entering industries and businesses that they have no experience directing??? For example, who in their right mind would pay a premium for a company or a piece of a company that has just been saturated with debt?? How can anyone make money doing this? One side question: do you think this reduction in private equity will hurt investors, i.e. further take the steam out of the market as a whole?