Size Doesn't Matter; PE Deal-Making Is Back

In another sign that private equity firms are back to their core purpose of deal-making, US defence contractor Northrop Grumman has disposed of its TASC government consulting unit to Kohlberg Kravis Roberts (KKR) for US$1.65bn in equity and debt. As both equity and debt markets stabilise, buyout firm managers are believed to be armed with coffers US$400bn deep in unspent capital - according to private equity research firm PitchBook Data. With that in mind, investors are now pressuring for deal-making, in order to see improved returns on their capital. While deals may be back, their size however is significantly smaller than in the golden days of the pre-crisis era. In a typical deal a couple of years ago, when private equity firms were offering huge premiums for large public companies, the size of a deal seemed almost as important as its value. Now however, according to PitchBook Data, lower middle-market deals accounted for 70% of the 407 deals completed by buyout funds in H109.

To read the full article, please choose one of the following options: