This paper by Steven N. Kaplan and Per Strömberg examines the leveraged buyout (LBO) and private equity industry, focusing on the firms and transactions involved. The authors provide a detailed overview of how private equity firms operate, including their fundraising, investment strategies, and transaction characteristics. They discuss the economic impact of LBOs, such as changes in capital structure, management incentives, and corporate governance. The paper also reviews empirical evidence on the returns to private equity funds and the economic value created by LBOs. The authors note that while LBOs have been associated with significant operating improvements and value creation, there are concerns about market timing and the potential for short-termism. The paper concludes by speculating on the future of private equity, suggesting that the recent boom may lead to a decline in investment and fundraising, but that a significant portion of the growth in private equity activity is likely to be permanent.This paper by Steven N. Kaplan and Per Strömberg examines the leveraged buyout (LBO) and private equity industry, focusing on the firms and transactions involved. The authors provide a detailed overview of how private equity firms operate, including their fundraising, investment strategies, and transaction characteristics. They discuss the economic impact of LBOs, such as changes in capital structure, management incentives, and corporate governance. The paper also reviews empirical evidence on the returns to private equity funds and the economic value created by LBOs. The authors note that while LBOs have been associated with significant operating improvements and value creation, there are concerns about market timing and the potential for short-termism. The paper concludes by speculating on the future of private equity, suggesting that the recent boom may lead to a decline in investment and fundraising, but that a significant portion of the growth in private equity activity is likely to be permanent.