Deal Flow

Inside the world of M&A, IPOs, and Venture Capital

Justin Hibbard
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October 06, 2006

Institutional investors pouring cash into private equity

Steve Rosenbush

One week after the end of the third fiscal quarter, it was apparent that 2006 was going to be a year of new benchmarks for increasingly large and powerful private equity firms players. Global mergers and acquisitions by financial sponsors, or private buyout groups, hit $570 billion during the first nine months of the year, up 51% from the prior record set during the first nine months of 2005, according to market researcher Dealogic.

Private investors are playing a bigger role in M&A, which has traditionally been dominated by large, publicly held corporations. link. Financial sponsors accounted for 22% of total, announced M&A volume during the first nine months of the year, up from 18% during the first nine months of 2005, Dealogic said.

Experts say the growing power of buyout specialists like market leader Blackstone Group, and other major players like Texas Pacific Group and Kohlberg, Kravis Roberts, stems from their prior success. “My view is that the private equity mega firms are able to raise large funds and do large deals because they have had top returns, and now the big public and private pension funds want to invest in the private equity market,” said John O’Neill, a partner and private equity advisor at Ernst & Young LLP Transaction Advisory Services. Returns in the private equity sector can be as high as 50%, he said.

05:11 PM

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