Walgreens left the stock market in 2025 — here is what happens to it inside a private-equity fund

On August 28, 2025, a fixture of American Main Street stopped trading. Walgreens — a pharmacy chain more than a century old, and once a member of the Dow Jones Industrial Average — saw its common stock cease trading on the Nasdaq as the private-equity firm Sycamore Partners completed its takeover. Public shareholders were cashed out at $11.45 a share, plus a contingent right to up to $3.00 more tied to the future sale of Walgreens' stake in the clinic operator VillageMD. All in, the deal was valued at up to $23.7 billion including assumed debt — only around $10 billion of it equity, the rest borrowed.

What happens to a company after it disappears from the ticker is what CFA Level I Alternatives asks you to understand.

A buyout, not a sale to a rival

Sycamore is not a competitor folding Walgreens into a bigger drugstore. It is a financial buyer running a leveraged buyout — acquiring an established company, typically with a large slug of debt, on the thesis that it can be reshaped away from the quarterly glare of public markets and sold again, whole or in pieces, in four to seven years. Sycamore moved immediately to split the business into separate standalone companies (Walgreens, Boots, Shields Health, CareCentrix, and VillageMD), the classic buyout move of breaking a sprawling business into parts worth more apart than together. (Walgreens' long-time chairman Stefano Pessina rolled his entire stake into the private company, the "skin in the game" that aligns an owner with the new structure.)

The structure behind the firm

A buyout firm like Sycamore does not invest its own money alone. It raises a fund organized as a limited partnership:

• The limited partners (LPs) — pensions, endowments, sovereign-wealth and family-office money — commit the capital and bear losses only up to what they put in.
• The general partner (GP) — Sycamore — makes every decision, contributes a smaller slice of capital, and is paid a management fee (around 2%) plus carried interest (around 20% of profits) once LPs clear a hurdle, often an 8% preferred return.

Crucially, LPs do not hand over the cash up front. They commit it, and the GP calls it as deals close, which is why an LP must keep liquid reserves ready for a capital call it cannot refuse.

The J-curve: why early losses are normal

This is the counterintuitive part the exam tests. Sycamore's investors should expect this deal, and the fund around it, to lose money on paper for the first few years. Management fees are charged on committed capital from day one, and early portfolio marks are conservative, so reported returns turn negative before any exit produces a gain. Plotted over time, fund returns trace a J: down first, then up as exits arrive in years five through ten.

An early negative IRR in private equity is mechanical; it is not a verdict on the fund. You do not judge a buyout fund in year two. That is also why a PE fund is compared against others of the same vintage year, not against a fund that deployed into a completely different market.

Reading returns without a price

The deepest difference began the moment Walgreens left the Nasdaq: there is no longer a daily price. A public stock is marked to the market every second; a private holding is marked by the GP's estimate until an actual sale turns it into cash. So performance is read through money multiples, TVPI (total value to paid-in) and the cash-only DPI (distributions to paid-in), rather than a quote. Until Sycamore sells the pieces, the reported gain is only an estimate; a distribution is what turns it into realized cash.

What it means for the exam

Alternative Investments is 7–10% of Level I, and private equity is tested conceptually: the LP/GP structure, the fee waterfall, the J-curve, and vintage-year comparison. The Walgreens deal puts that syllabus into practice: the day a household name stopped being a stock price and became a private holding whose returns its new owners will not fully measure for years.