Set out the defining features of buyouts as a private equity strategy

A buyout acquires a controlling stake, usually in a mature, cash-generative business, and pays for much of the price with debt: senior loans, high-yield bonds and sometimes mezzanine, with sponsor equity as the smaller part. Variants include management buyouts led by existing managers, management buy-ins with outside managers, take-privates of listed companies, secondary buyouts and buy-and-build platforms. Returns come from paying down debt with operating cash flow, operational improvements, add-on acquisitions and any rise in the exit multiple. Management equity aligns incentives. Control lets the sponsor change strategy, capital structure and leadership. The trap: leverage raises expected equity returns only while the return on assets exceeds the cost of debt, and it magnifies losses when it does not.