Leverage ≠ Higher Risk, Lower Returns

Deal Leverage vs. Gross IRR

This week we’re taking a look at a spectrum of private equity investments across their leverage multiple at acquisition and their exit IRR. A lot has been debated on the relationship of the two characteristics. We find, with this analysis, there has not been significant correlation between acquisition leverage multiple and performance. The data runs counter to popularly held beliefs that high leverage levels mean increased risk and lower returns. 

Catch up on Chart of the Week.