Buyout

The classic item gives you a deal narrative and asks which lever did the work: if entry and exit EV/EBITDA multiples match but debt fell and EBITDA grew, the answer is deleveraging plus operational improvement, not multiple expansion — that lever only counts when the exit multiple exceeds the entry multiple. A second favourite is the buyout-versus-venture sort, and the tell is the kind of risk. Buyout risk is financial (the leverage), so returns are relatively predictable; VC risk is operational and binary — the company works or it doesn’t — and VC uses little or no debt because startups burn cash. VC returns follow a power-law, home-run distribution rather than buyout’s steadier profile.

The trap is treating buyout and private equity as synonyms. Buyout is one strategy inside the PE wrapper (alongside venture capital and growth equity), so the limited-partnership fund mechanics, the J-curve, and the 2-and-20 (2% management fee plus 20% carried interest) belong to the parent, not to buyout specifically.