Have debt levels in PE transactions been increasing or decreasing?
A. Debt levels associated with private equity transactions generally have been decreasing over time. According to Standard & Poors data cited in M&A Quarterly Review, from 1987 through 1990, the average level of debt associated with a leveraged buyout transaction was 87.3 percent while the equity contribution was 12.7 percent. The share of debt dropped to an average of 71.65 percent for the period from 1992 through 2000 and to 63.75 percent for the period from 2001 through 2007, while the equity contribution rose to 28.5 percent and then 36.5 percent. (Debt levels in the 2006-2007 period were higher because of the increased availability and decreased cost of credit.
