Determining Debt Proportion in LBOs

Private equity (PE) investments can vary significantly based on the financing structure and nature of the transaction. One common form of PE investment is leveraged buyouts (LBOs), where a private equity firm acquires a company using a substantial amount of borrowed money. This approach allows the firm to amplify its potential returns. However, understanding the nuances of equity contributions is critical.

When considering an LBO, what is the primary factor that determines the proportion of debt in the capital structure of the acquired entity?