The 4th of July is a traditional time to reflect upon and be grateful for the freedom and prosperity of American life, culture, and its economy. American capitalism - the greatest wealth-creating engine in the history of the world - remains despite stresses - the envy of the world in its ability to encourage and reward innovation and new business models. From the airline industry to biotechnology to the Internet, the great growth businesses of the 21st century are led and will continue to be led by American business.

Frothy private equity markets and the desperate need of financial and strategic financiers/acquirers to identify and incentive-ize quality management partners have combined to create a heightened interest in management buyouts (MBOs). An MBO is a form of leveraged buyout (LBO) used to transfer all or part of the ownership of a company to the individuals with the primary operational responsibilities for the enterprise. Both debt and equity investors are particularly interested in financing MBO because of the three "I's":

 

A feature story in this week's Fortune Magazine presents the case that we are right now living in the greatest global economic boom ever. A few salient statistics from the article drives the point home:

• World GDP growth averaged 4.9% from 2003 to 2007 on a total GDP of over $36 trillion (!). To put this number in perspective, right now GDP annual growth is approximately $1.8 trillion, or an amount greater than the entire annual economic output of France, the world's 8th largest economy.

If history is any guide, last week's stock market correction, driven by liquidity concerns in the real estate sector, may signal (counter-intuitively, perhaps) continued strong activity in the emerging and middle market company investment arenas. Here's why: