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.
Carlyle Group, the giant global private equity firm with over $86 billion of assets
under management, is taking steps to attract more women and minorities into the private equity industry.
The firm has teamed up with The Robert Toigo Foundation to create an MBA fellowship program which includes time working at Carlyle, and experience with some of its portfolio companies and investors, according to Reuters.
The article quotes David Rubenstein, co-founder of Carlyle, as saying the private equity industry is “behind” investment banks and law firms in hiring women and minorities. “We hope this will lead to our recruiting some very talented minority MBAs,” he said. ”In our particular case, we do have the most senior women in the buyout world who are partners here, and we have a number of senior minority black partners, but we could do better,” he said. The firm has pledged $1 million over four years for the fellowship program.
The three-part fellowship rotation will provide each fellow with exposure to Carlyle, a portfolio company, and include focused private equity training from professionals at Toigo. Selected fellows receive an annual stipend, including a $50,000 MBA tuition payment to help pay off their MBA loans.
Second-year minority MBA students who are interested in private equity jobs can find more information and apply for the Toigo Private Equity MBA Fellowship by visiting www.toigofoundation.org
David Rubenstein, co-founder of the Carlyle Group, expects the private equity industry to come roaring back even stronger than it was when we finally pull out of this recession. And that could be good news for private equity job seekers.
Speaking with Bloomberg Television, Rubenstein admitted that Carlyle, the world’s second largest private equity firm, did buy some companies at prices and debt levels that were too high. But now he sees opportunities in distressed assets. Both Carlyle and its larger rival, The Blackstone Group, are bypassing the giant public-to-private buyouts that made headlines before the crash and instead are focusing on smaller deals for struggling businesses such as regional banks. Both firms were involved in buying the failed Florida lender BankUnited Financial earlier this year.
The only clouds on the private equity horizon are potential European Union regulations that would make it more difficult to invest in private equity companies, and perhaps rising debt levels that will force the U.S. to pay higher interest rates, he said.
