After 3 years of debt servicing and cost-cutting, the PE firm lists the company again via an IPO or sells it to a strategic buyer (e.g., an LG or a Verizon). They walk away with a 3x return.
Plex, the beloved "one-stop-shop" for personal media and live TV, has long been a rumored LBO target. It has a passionate user base (high retention), proprietary software, but inconsistent profit margins. In a hypothetical LBO, a PE firm would buy Plex using debt, sell off its data licensing arm to a third party, raise the price of Plex Pass, and cut community support costs. The asset would be "flipped" in 3-5 years to a larger tech giant like Comcast or Samsung. media player lbo