Other private equity investors might acquire a target to enhance their purchasing power. For example, in the case of a leveraged buyout, the private equity fund would borrow additional money to increase its buying power, using the target acquisition’s assets as collateral. In other cases, the acquisition could grant preferential pricing with key vendors, reducing the cost of goods and services, which can lead to higher profit margins. Another reason private equity groups will hold an acquisition is for access to certain vendors.
