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Justin Hibbard
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May 23, 2006

Is a $35B Tech LBO Imminent?

Justin Hibbard

At the heart of every joke is a little grain of truth. Consider this quip made today by Silver Lake Partners co-founder Jim Davidson at the JPMorgan Technology Conference in San Francisco: "No one in the private equity industry knows that Intel trades at 8.2 times EBITDA, so let's go do that!" Though Davidson was joking, the idea that a gang of private equity megafunds could buy a $105 billion icon such as Intel is not beyond the realm of possibility these days. Texas Pacific Group partner Gene Frantz, who sat on a panel with Davidson at the conference, wasn't joking when he said, "I think you can predict with reasonably high likelihood that some time in the next 16 months you'll see a $25 to $35 billion buyout in technology." Raj Kapadia, managing director of leveraged finance at JPMorgan, was quick to add: "No deal is too big in the tech sector." What a time to be in private equity!

08:56 PM


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You say it is “just a matter of time” before CA is a buyout target. Have you heard of any private-equity firms specifically expressing an interest in CA? Or, is your assessment purely based on speculation given your quantitative screens of market cap, p/e, cash flows, and stock performance? The screen you use seems to ignore many qualitative factors - such as the pending SEC deferred prosecution agreement, that would likely inhibit a buyout.

Posted by: Mark at June 5, 2006 02:34 PM

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