This paper describes and presents time series evidence on the leveraged buyout (LBO) and private equity industry, including firms and transactions. It discusses existing empirical evidence on the economics of these firms and transactions. The paper compares the recent private equity wave with the 1980s wave and speculates on the implications of the evidence for the future of private equity. Leveraged buyouts emerged as an important phenomenon in the 1980s. Jensen (1989) predicted that LBO organizations would eventually become the dominant corporate organizational form. However, this prediction seemed premature as the junk bond market crashed and many LBOs resulted in default and bankruptcy. The LBO market did not die but went into hiding. While LBOs of public companies were scarce in the 1990s and early 2000s, LBO firms continued to purchase private companies and divisions. In the mid-2000s, public-to-private transactions reappeared. In 2006 and 2007, a record amount of capital was committed to private equity, both in nominal terms and as a fraction of the overall stock market. The extent of private equity commitments and activity rivaled, if not overtook, the activity of the first wave in the late 1980s. However, in 2008, with the turmoil in the debt markets, private equity appears to have declined again. The paper describes how the private equity industry works, including private equity organizations such as Blackstone, Carlyle, and KKR, and the components of a typical LBO transaction. It presents evidence on how private equity fundraising, activity, and transaction characteristics have varied over time. The paper considers the effects of private equity on capital structure, management incentives, and corporate governance. It suggests that private equity activity creates economic value on average. However, there is also evidence consistent with private equity investors taking advantage of market timing and market mispricing between debt and equity markets, particularly in public-to-private transactions. The paper reviews the empirical evidence on the economics and returns to private equity at the fund level. Private equity activity appears to experience recurring boom and bust cycles related to past returns and interest rates relative to earnings. Given the unprecedented boom of 2005-2007, it is likely that there will be a decline in private equity investment and fundraising in the next several years. While the recent market boom may eventually lead to some defaults and investor losses, the magnitude is likely to be less severe than after the 1980s boom because capital structures are less fragile and private equity firms are more sophisticated. Therefore, the paper expects that a significant part of the growth in private equity activity and institutions is permanent. The paper also discusses the characteristics of private equity transactions, the commitments to private equity funds, and the manner and timing of exit. It finds that private equity firmsThis paper describes and presents time series evidence on the leveraged buyout (LBO) and private equity industry, including firms and transactions. It discusses existing empirical evidence on the economics of these firms and transactions. The paper compares the recent private equity wave with the 1980s wave and speculates on the implications of the evidence for the future of private equity. Leveraged buyouts emerged as an important phenomenon in the 1980s. Jensen (1989) predicted that LBO organizations would eventually become the dominant corporate organizational form. However, this prediction seemed premature as the junk bond market crashed and many LBOs resulted in default and bankruptcy. The LBO market did not die but went into hiding. While LBOs of public companies were scarce in the 1990s and early 2000s, LBO firms continued to purchase private companies and divisions. In the mid-2000s, public-to-private transactions reappeared. In 2006 and 2007, a record amount of capital was committed to private equity, both in nominal terms and as a fraction of the overall stock market. The extent of private equity commitments and activity rivaled, if not overtook, the activity of the first wave in the late 1980s. However, in 2008, with the turmoil in the debt markets, private equity appears to have declined again. The paper describes how the private equity industry works, including private equity organizations such as Blackstone, Carlyle, and KKR, and the components of a typical LBO transaction. It presents evidence on how private equity fundraising, activity, and transaction characteristics have varied over time. The paper considers the effects of private equity on capital structure, management incentives, and corporate governance. It suggests that private equity activity creates economic value on average. However, there is also evidence consistent with private equity investors taking advantage of market timing and market mispricing between debt and equity markets, particularly in public-to-private transactions. The paper reviews the empirical evidence on the economics and returns to private equity at the fund level. Private equity activity appears to experience recurring boom and bust cycles related to past returns and interest rates relative to earnings. Given the unprecedented boom of 2005-2007, it is likely that there will be a decline in private equity investment and fundraising in the next several years. While the recent market boom may eventually lead to some defaults and investor losses, the magnitude is likely to be less severe than after the 1980s boom because capital structures are less fragile and private equity firms are more sophisticated. Therefore, the paper expects that a significant part of the growth in private equity activity and institutions is permanent. The paper also discusses the characteristics of private equity transactions, the commitments to private equity funds, and the manner and timing of exit. It finds that private equity firms