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 Vermont, as in other states, private equity (PE) financing is a common method for funding the acquisition or expansion of businesses. PE firms provide capital to privately owned companies, often to facilitate a buyout of existing owners. These transactions frequently involve leveraged buyouts (LBOs), where the acquisition is financed through significant debt that the target company assumes. The target company is then responsible for repaying this debt, along with any accrued interest. Vermont does not have specific statutes that uniquely regulate PE firms or LBOs; instead, these transactions are governed by general corporate law, securities regulations, and contract law. Additionally, federal laws, such as securities laws enforced by the Securities and Exchange Commission (SEC) and tax regulations, also apply to PE transactions. It is important for companies involved in such deals to ensure compliance with all relevant laws and to consider the implications of taking on substantial debt.