As discussed in chapter 2, private equity (PE) firms raise investment funds to purchase companies, using large, leveraged levels of debt, borrowed against the assets of the target company. After the company is acquired, it is restructured and financially engineered, then sold, hopefully at a profit. Private equity often seeks out "distressed assets"—companies that are facing financial or operational difficulty and are thus more susceptible to a leveraged buyout. Due to file sharing, a recession, changing consumer behavior, and other factors, many music companies fell on hard times in the early 2000s and were subsequently targeted by private equity.

Andrew deWaard, Derivative Media, loc. 188