Thursday, March 23, 2006

Private Equity Buyouts cont'd

There is an interesting article in addressing the growing phenomenon of private equity buyouts.


In particular, the article discusses the growing number of deals where private equity firms are combining their resources in an effort to share the risks and to increase the size of the game hunted.

The growth in buyouts is quantified:

“The rise of club deals comes at a time when business at private-equity firms has never been better. Last year, buyout shops broke all previous records, spending about $200 billion in 845 deals. The amount spent was nearly 50 percent more than 2004's total, more than twice the amount in 2003, and upwards of eight times the amount spent by buyout shops in 2001, the industry's most recent low point.”

As we posted recently, this is a trend that investors should heed. Buyouts of franchise companies throwing off free cash and having decent balance sheets will be recognized by both activists and the private equity buyers.


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