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 Washington State, private equity (PE) financing operates under the same basic principles as it does elsewhere in the United States. PE firms invest in privately held companies, often with the goal of acquiring a significant stake or complete ownership. These transactions frequently involve leveraged buyouts (LBOs), where the acquisition is financed through a substantial amount of debt that the target company is responsible for repaying. The regulatory framework for such transactions includes both federal securities laws and state regulations. At the federal level, the Securities and Exchange Commission (SEC) oversees and regulates securities transactions, which would include PE investments and LBOs. Additionally, the Dodd-Frank Wall Street Reform and Consumer Protection Act imposes certain restrictions and reporting requirements on PE firms. At the state level, Washington's securities laws, often referred to as 'Blue Sky Laws,' also govern the registration and sale of securities within the state. These laws are designed to protect investors and ensure fair dealing in the securities markets. It's important for PE firms and target companies to comply with both federal and state regulations when engaging in PE financing and LBOs.