In the years that preceded the financial crisis in 2008, private equity sponsors could easily find priced leverage financing. The most typical type of investment that was carried out, particularly in 2004 and 2005, consisted in a direct investment with an amount of maximum 15% for equity stake (found after having launched an off-shore investment fund), and generally 85% of hybrid instruments also reserved to stakeholders. If a target company could not be resold within 3 to 5 years, a refinancing took place, where the bank lenders injected new cash at the level of the operational business and a repurchase of the hybrid investments was carried out, which usually resulted in 1% equity and 99% financing.
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