With the credit crunch easing and markets stabilizing, private equity firms are returning to dealmaking, particularly in the mid- and lower mid-market.
The Deal.com reports that lower and mid-market deals accounted for 70% of the 407 transactions by buyout funds so far in 2009, citing data from PitchBook. Financing for new deals is flowing again and buyout managers have a collective $400 billion in unspent capital. An example of the new sweet spot for deal making would be General Atlantic LLC and affiliates of Kohlberg Kravis Roberts & Co. recent purchase of Northrup Grumman’s military intelligence unit, Tasc Inc., for $1.65 billion.
The pick-up in mid-sized dealmaking has prompted banks such as UBS and BMO Capital Markets to beef up their financial sponsor teams. Fifth Third Bancorp has also formed a private equity lending team to target acquisitions in the $10 million to $50 million Ebitada range. Even law firms are bulking up, with firms such as Winston & Strawn LLP and Ropes & Gray LLP recently announcing new hires and expansions of their private equity advisory practices.
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