Private equity (PE) financing is money invested by PE firms in privately owned businesses. PE financing is often used to buy out some or all of the ownership interests of the owners of a business (target company). PE firms often use debt to finance these buyout transactions—with the target company taking on significant loans to secure the money (capital) to buy out the current owners of the business. The target company must, of course, pay back these loans from its lenders, with interest. Because of this use of debt financing, these buyouts have traditionally been called leveraged buyouts (LBOs).

In Pennsylvania, private equity (PE) financing operates under the same general regulatory framework as it does at the federal level, with additional state securities laws and regulations that may apply. PE firms typically invest in privately held companies, often structuring deals as leveraged buyouts (LBOs) where the acquisition is financed through a significant amount of debt. The target company assumes this debt, which it is responsible for repaying with interest. These transactions are subject to various laws, including securities laws enforced by the U.S. Securities and Exchange Commission (SEC) and Pennsylvania state securities regulations. The Pennsylvania Securities Act of 1972, along with other state laws, governs the offering and sale of securities within the state, requiring proper registration and disclosure unless an exemption applies. PE firms must also be mindful of corporate governance, antitrust laws, and tax implications when structuring LBOs. It is advisable for companies and PE firms to consult with an attorney to ensure compliance with all relevant laws and regulations when engaging in PE financing and LBO transactions.