**GAO-08-885**                      Published: Sep 09, 2008. Publicly Released: Oct 07, 2008.                  

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## Highlights

The increase in leveraged buyouts (LBO) of U.S. companies by private equity funds prior to the slowdown in mid-2007 has raised questions about the potential impact of these deals. Some praise LBOs for creating new governance structures for companies and providing longer term investment opportunities for investors. Others criticize LBOs for causing job losses and burdening companies with too much debt. This report addresses the (1) effect of recent private equity LBOs on acquired companies and employment, (2) impact of LBOs jointly undertaken by two or more private equity funds on competition, (3) Securities and Exchange Commission's (SEC) oversight of private equity funds and their advisers, and (4) regulatory oversight of commercial and investment banks that have financed recent LBOs. GAO reviewed academic research, analyzed recent LBO data, conducted case studies, reviewed regulators' policy documents and examinations, and interviewed regulatory and industry officials, and academics.

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## Topics

Financial Markets and Institutions

Banking regulationCompetitionConflict of interestsCorporate mergersDebtEmployee buyoutsEmploymentFederal regulationsFinancial institutionsFinancial managementFinancial markets regulationFinancial regulationFunds managementInternal controlsInvestment companiesInvestment planningProcurementRisk assessmentRisk managementLeverage (financial)