LBO Market Heats Up

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May 3

May 3, 2006

Know More: Private Equity, Raising Money, Selling a Business 2.0, Private Equity

CFO.com reports today that the number of LBO's (leveraged buyouts) among public companies with a market capitalization of less than $2 billion has an annual rate of 52 (13 in the first quarter), a pace not seen since 2000. This is also a big step up from the 39 marked last year.

Of course, there are three quarters left to run this year and no guarantee the pace will continue.

From my vantage point, I am seeing a couple of key drivers for the level of activity. Banks are lending more aggressively than any time I can remember in the last twenty years. Leverage allows for deal values to increase with the same amount of equity investment from private equity sponsors. Increased deal values brings more sellers into the market.

This is a great time to sell a business.

related entries

UTC Presentation: 10 Ways to get Money to Chase You Aug 7, 2006
Devin's Definition: Barrier to Entry Jun 22, 2006
Devin's Definitions: Term Sheet May 30, 2006
Devin's Definitions: Recapitalization Mar 2, 2006
Private Equity Returns and the "J" Curve Feb 21, 2006

2 Comments/Trackbacks

I find LBOs extremely interesting, I have to admit. It seems like between Sorenson Cap and Peterson, the Utah market is especially ripe as well.

On another note, I can't wait to hear what you think about the new v|100. also, I hope you'll check out my blog (http://blog.the801.com)

thanks!

Posted by: nick (uvf) | May 3, 2006 10:52 PM | Permalink to Comment

Thanks for your comment, Nick. While you were commenting, I was pulling together my v|100 post! Great minds think alike!

ddt

Posted by: Devin Thorpe | May 4, 2006 12:05 AM | Permalink to Comment

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