Private Equity Firms Are Piling On Debt to Pay Dividends

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Debt-funded dividends do nothing to help private equity-owned companies and only put those companies at greater risk.

Jim Baker, executive director of the Private Equity Stakeholder Project, commenting to The New York Times last week for its report, “Private Equity Firms Are Piling On Debt to Pay Dividends.” Baker said the concern he has with using borrowed money to pay for a dividend is that it could hamstring a company’s ability to borrow new money for purposes that could help it grow.