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 New York, private equity (PE) financing is a common practice where PE firms invest in privately held companies. This investment is often used to facilitate the purchase of a business's ownership stakes, commonly known as a buyout. During such transactions, it is typical for PE firms to leverage the buyout by using debt financing, meaning the target company incurs significant debt to fund the purchase of its own shares. This process is traditionally referred to as a leveraged buyout (LBO). The target company is then responsible for repaying the borrowed funds, along with any accrued interest. The regulatory framework for these transactions includes both federal securities laws and state regulations that govern financial transactions, corporate governance, and fiduciary duties. It is important for companies engaging in LBOs to comply with these regulations, which may involve the Securities and Exchange Commission (SEC) requirements, as well as adhering to state laws that address corporate structure and creditor protections.