Are We Seeing The Return Of The LBO Deal?

A bid approach for drug data provider IMS may well be making noise as one of the largest proposed PE deals of 2009, but more importantly it heralds a clearer indication of the long-awaited return of the leveraged-buyout (LBO) business. In what is set to be the largest LBO deal in the US in over a year, IMS is attracting several potential PE bidders, owing to its projected year-end cash flow target of US$380mn. This means the wining PE bidder will be able to use the steady streams of cash to pay off debt taken onboard to pay for deals. In addition, due to the nature of IMS's operations - which provides sensitive market data to competing health care firms - no pharmaceutical majors have engaged in talks for the company. PE firm TPG is believed to be in the bidding, while Silver Lake and BC Partners have also submitted a joint bid.

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