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
This week marked the sudden passing of Bruce Wasserstein, one of the world’s most successful private equity investors and richest men. Wasserstein, 61, died of heart-related complications in a New York Hospital.
Wasserstein worked on deals valued at more than $250 billion during his 32-year career in finance. His hardball tactics were immortalized in the 1990 book, Barbarians at the Gate, which told the story of the private equity firm KKR’s takeover of food and tobacco giant RJR Nabisco. At $30 billion, it was the biggest leveraged buyout in history for many years. Wasserstein was among the first bankers to use public relations advisors to gain the upper hand in a takeover, according to The Times Online.
After earning a Harvard MBA and attending the London School of Economics, Wasserstein worked as an attorney and then joined First Boston in 1977. He left to start his private equity career, setting up his own advisory firm, Wasserstein Perella & Co in 1988, which he sold to Dresdner Bank in 2001 for $1.5 billion. He joined Lazard Ltd. in 2002 and became its chief executive and chairman in 2005.
Wasserstein was famous for his strategic thinking, and his ability to convince bidders to pay more than they planned for an acquisition. He invented the “Pac Man” defense where a takeover target turns around and buys its would-be acquirer instead. The large private equity deals he worked over his career included:
- Robert Campeau’s $6.6 billion takeover of Federated Department Stores, which included Bloomingdale’s
- $9 billion purchase of Conoco by DuPont
- The $10.7 billion purchase of Getty Oil by Texaco
- Time Inc.’s $13.4 billion deal for Warner Communications
- KKR’s $30 billion takeover of RJR Nabisco
