Private equity (PE) financing is money invested by PE firms in privately owned businesses. PE financing is often used to buy out some or all of the ownership interests of the owners of a business (target company). PE firms often use debt to finance these buyout transactions—with the target company taking on significant loans to secure the money (capital) to buy out the current owners of the business. The target company must, of course, pay back these loans from its lenders, with interest. Because of this use of debt financing, these buyouts have traditionally been called leveraged buyouts (LBOs).

In Hawaii, as in other states, private equity (PE) financing is a common method used by PE firms to invest in privately owned businesses. The regulatory framework for such transactions is governed by a combination of state statutes and federal law. Hawaii's state statutes would govern the general conduct of business transactions, including the creation and enforcement of contracts, corporate governance, and securities regulations at the state level. At the federal level, PE transactions, especially those involving significant amounts of debt, are subject to regulations by the Securities and Exchange Commission (SEC), including disclosure requirements under the Securities Act of 1933 and the Securities Exchange Act of 1934. Additionally, leveraged buyouts (LBOs) may be scrutinized under antitrust laws and are subject to the oversight of the Federal Trade Commission (FTC) and the Department of Justice (DOJ) to ensure they do not create anti-competitive effects. It is important for businesses engaging in PE financing to comply with these regulations and to consult with an attorney to navigate the complex legal landscape of such transactions.