The loan has been fully drawn down, matures in five years and accrues interest at LIBOR plus 9.25%, for a current rate of 10.75%, with interest payable quarterly in arrears.

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At the most opportune moment, and not more than several years after being acquired, each company must be sold to a willing buyer at a significant profit in order to return to investors their original capital, together with sufficient profit to provide for the carried interest to become payable.

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In many of those deals, the lender requires an extra guarantee from the borrower's parents, and the interest rates payable by the borrower are considerably higher than for someone taking a mortgage with a larger down payment of, say, 20% or 25%.

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