article thumbnail

Private Equity’s New Phase

Harvard Business Review

The primary focus was on fixing the acquired firm through financial restructuring, dramatic cost cutting, and strategic slashing. Leaders were driven by short-term profits and rapid action to flip the organization. Traditionally, PE firms bring financial discipline and strategic clarity to firms they acquire.

LBO 8
article thumbnail

Stop Focusing on Profitability and Go for Growth

Harvard Business Review

So, in real terms, debt financing is essentially free. See More Videos > See More Videos > To elaborate, a company’s intrinsic equity value reflects the long-term cash flows that shareholders expect to receive over time, discounted at the appropriate risk-adjusted cost of equity capital.

ROE 14