Your Evening Briefing: Private Equity Has a Novel Buyout Strategy

Long maligned as the debt-addicted corporate raiders of Wall Street, private equity firms are resorting to an unusual maneuver to get deals done as borrowing costs spiral. They’re taking the leverage out of leveraged buyouts. Several firms have announced new acquisitions in recent weeks without debt financing in place, effectively backstopping the entire purchase price—in some cases north of $2 billion—with cash from their own funds. Interest rates are rising relentlessly and big banks are failing to offload the tens of billions of dollars worth of sinking buyout debt stuck on their books. Even capital-rich private credit funds, long-heralded as the savior of LBO financing, have cut back.