Private equity firms use significantly less leverage today than they did 15 years ago. Average loan-to-value on new investments was 53 percent in 2020, down from 68 percent in 2005. This decline in debt financing underscores how the industry has matured and undercuts some mischaracterizations about how the industry uses borrowed capital.












Additionally, those private-equity-owned companies that do borrow default at a far lower rate than other corporate borrowers with loans outstanding. In 2020, loans to businesses owned by private equity defaulted at less than half the rate of loans to other non-investment grade public and private companies. This data underscores how private equity firms use debt responsibly and how private equity firms help businesses manage cash flow. Private debt also allows for a proactive and negotiated solution to challenges facing companies and their sponsors.










Credit is critical for businesses to grow and to ensure a dynamic and growing economy. Private credit – defined broadly as credit issued by non-investment-grade businesses – has become a growing and increasingly mainstream source of funding for a broad array of companies of all sizes and sectors. It offers investors a path to achieve higher and diversified returns. And it increases the strength and resilience of the U.S. economy. The latest data on the industry’s use of debt shows how businesses owned by private equity are deploying this capital responsibly, and firms are significantly less reliant on debt to finance transactions than they were 15 years ago.

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