Leveraged buyout firms, which have grown rapidly in recent years, create economic value by curbing the resource waste and corporate malfeasance that can hold back or sink public companies. Unfortunately, ignorance about what they do, the threat they pose to incompetent corporate managers and poor money managers, and biases against highly profitable financial enterprises may provoke a legal and regulatory backlash that would discourage the economically beneficial activities that they and other types of private-equity partnerships undertake.

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